The nation’s largest hotel chains settled a class-action lawsuit brought by consumers of hotel room reservations booked online. Consumers alleged hotel chains agreed to restrain competition for paid search advertising for hotel rooms associated with defendants’ brand names, depriving consumers free, competitive information, and raising the price of hotel rooms booked online.
The case settled on confidential terms.
WHICH HOTEL CHAINS WERE INVOLVED?
Plaintiffs alleged that 60% of all hotels were involved in an overpricing scheme, increasing the price of consumers' hotel room reservations involving the following six big hotel chains:
- Six Continents Hotels - including Holiday Inn, Holiday Inn Express, Candlewood Suites, Crowne Plaza, Staybridge Suites and all other InterContinental-branded hotels
- Wyndham - including Travelodge, Super 8, Knights Inn, Ramada, Days Inn, Howard Johnson's and all other Wyndham-branded hotels
- Hilton - including Hampton Inn, DoubleTree, Embassy Suites, Homewood Suites, Hilton Garden Inn, Waldorf Astoria and all other Hilton-branded hotels
- Marriott - including Sheraton, Starwood, Ritz-Carlton, Residence Inn and all other Marriott-branded hotels
- Hyatt - including Park Hyatt, Grand Hyatt and all other Hyatt-branded hotels
- Choice Hotels – including Comfort Inn, Quality Inn, Comfort Suites, Econo Lodge and all other Choice-branded hotels.
ANTI-COMPETITIVE PRACTICES
The consumer plaintiffs alleged that the six hotel chains agreed to illegal measures to reduce competition and raise prices for their hotel rooms.
Plaintiffs’ complaint alleged that the hotel competitors willfully refrained from bidding for online advertising that would appear in response to searches containing the competitors' brand names. For example, Hilton Hotel declined to bid to have its ads appear in response to internet searches for Hyatt, thus making it more difficult for consumers to get information about and compare and contrast competitive information, such as price and quality, between the two hotels.
Plaintiffs claimed that by agreeing not to advertise in response to searches for competitors’ brands on popular online search engines, these hotel chains effectively reduced the ability for consumers to conduct a reasonable comparison between various competitors to get the best price for their hotel rooms. This in turn, left hotel chains with free reign to keep prices high, with no threat of consumers seeing competing ads.
Plaintiffs further alleged that these six hotel chains agreed to restrict online travel agencies (such as Priceline.com or Expedia) from bidding on branded keywords as well, thus making it less likely consumers would see the choices available on those online travel agency websites.
TOP CONSUMER RIGHTS FIRM
Hagens Berman is one of the most successful consumer litigation law firms in the U.S. and has achieved more than $320 billion in settlements for consumers in lawsuits against food corporations, automakers, big banks and others.
Hagens Berman believes consumers deserve to pay fair prices for their hotel rooms.
