From HOTEL NEWS:
Online travel agencies lost a major case in Texas earlier this month and, after poring over the judge’s findings, at least one hotel distribution consultant says the ruling will set a precedent in how municipalities collect tax on hotel rooms sold through online merchant models.
The heavy-hitting OTAs lost a class-action lawsuit by 173 cities in Texas as defendants in The City of San Antonio v. Hotels.com, which was initially filed in May 2006 and is one of the longest-running cases against OTAs. The ruling on 1 July declared OTAs must collect taxes on the full retail rate they charge consumers as opposed to the wholesale rate they get from hotels, including margins and service fees.
“Because the (OTAs) are not occupants, they never have the right to occupancy, and the wholesale rate they pay for the right to sell a hotel room is not consideration paid for the right to occupancy, there is absolutely no reason for hotel occupancy taxes to be imposed on wholesale rates paid by the (OTA) to the hotel,” the judge’s ruling states…
Click here to read the full article.
EDITOR: Consumers would save a portion of the sales tax by purchasing directly through hotel web sites rather than others such as Orbitz and Expedia.
While that might be true, there is a possibility that those sites will be hit next with full sales tax. And the heart of the matter is that people tend to go to sites like Orbitz and Expedia to find the best deals possible. For many it’s quick and easy.