Reservations.com has no direct agreements with hotels, the complaint for this class action alleges. Instead, it gets its room listings from Expedia, Inc. and that company’s subsidiaries, EAN.com, LP, Travelscape, LLC, and Hotels.com, LP. And, the complaint says, those companies overcharge Reservation.com’s customers for taxes and fees due on those rooms.
The class for this action is all individuals who booked or paid for a pre-paid room reservation using the Reservations.com website or call center where the room inventory was supplied by Expedia or an Expedia subsidiary, from January 1, 2014 through the present.
Expedia and its subsidiaries get rooms from hotels via what the complaint calls a “merchant model” contract: The company pays the hotel a wholesale or “net” price for rooms, then marks them up to the rates they wish to sell them at. After the stay is finished, the company pays taxes on the hotel room as well.
When people book a room online with Reservations.com, they typically pay three charges: a room rate, a service fee, and a “tax and fees” rate. (This last can be called by a number of different names, such as “tax recovery charges & fees” or simply “tax.”) Reservations.com supposedly makes its money from service fee, and the room rate and taxes go to Expedia or whatever company held the room in its inventory.
However, the complaint alleges that Expedia and its subsidiaries make an additional amount by overcharging customers for the taxes due on the rooms. The complaint gives several instances of charges that seem excessive.
For example, a room at a hotel in Seattle that Reservations.com showed as being $159 per night had a “tax recovery charges and fees” charge of $50.88. Yet the complaint claims that the total state and local taxes for a Seattle room is 15.6% plus $2 per night, adding up to $27—an overcharge of $23.88.
The complaint says that the overcharge was actually even higher because it believes that the actual tax paid was based on the net rate that that the company paid the hotel for the room.
Reservations.com claims to have booked some 4 million hotel rooms through its website. If each of those rooms had a $23.88 overcharge, the complaint says, then Expedia and its subsidiaries have collected some $95 million in overcharges.
The counts in the complaint include violations of the Racketeer Influenced and Corrupt Organizations (RICO) Act, conversion, and misappropriation, among other things.
Article Type: LawsuitTopic: Consumer
Most Recent Case Event
Expedia Tax Overcharge for Reservations.com Hotel Rooms Complaint
December 17, 2018
Reservations.com has no direct agreements with hotels, the complaint for this class action alleges. Instead, it gets its room listings from Expedia, Inc. and that company’s subsidiaries, EAN.com, LP, Travelscape, LLC, and Hotels.com, LP. And, the complaint says, those companies overcharge Reservation.com’s customers for taxes and fees due on those rooms.
expedia_tax_overcharges_compl.pdfCase Event History
Expedia Tax Overcharge for Reservations.com Hotel Rooms Complaint
December 17, 2018
Reservations.com has no direct agreements with hotels, the complaint for this class action alleges. Instead, it gets its room listings from Expedia, Inc. and that company’s subsidiaries, EAN.com, LP, Travelscape, LLC, and Hotels.com, LP. And, the complaint says, those companies overcharge Reservation.com’s customers for taxes and fees due on those rooms.
expedia_tax_overcharges_compl.pdf