Antitrust lawsuit filed against six major hotel chains
 
Antitrust lawsuit filed against six major hotel chains
20 MARCH 2018 8:49 AM

The lawsuit alleges six hotel chains conspired to reduce competition through an agreement to eliminate online branded keyword search advertising against each other, resulting in higher guestroom prices.

CHICAGO, 19 March 2018 – A new class-action lawsuit has uncovered an antitrust scheme by major hotel chains, including Choice Hotels, Hilton, Hyatt, InterContinental, Marriott and Wyndham, alleging they conspired to reduce competition and raise consumer prices, according to Hagens Berman.

Attorneys say millions of consumers have been affected by the years-long anti-competitive practices that cost them billions of dollars.

The suit, filed Mar. 19, 2018, in the U.S. District Court for the Northern District of Illinois states that defendants engaged in an anti-competitive agreement to eliminate online branded keyword search advertising against each other. This in turn, according to the suit, deprives consumers of the free flow of competitive information, raising prices for hotel rooms, and raising the cost of finding hotel rooms.

Which hotels are included?
Approximately 60 percent of all hotel room inventory in the United States is involved in this lawsuit, including:

  • Choice Hotels International - Comfort Inn, Comfort Inn Suites, Quality Inn, Sleep Inn and all other Choice Hotels International-branded hotels
  • Hilton - Hampton Inn, DoubleTree, Embassy Suites, Homewood Suites, Hilton Garden Inn, Waldorf Astoria and all other Hilton-branded hotels
  • Hyatt - Park Hyatt, Grand Hyatt and all other Hyatt-branded hotels
  • InterContinental - Holiday Inn, Holiday Inn Express, Candlewood Suites, Crowne Plaza, Staybridge Suites and all other InterContinental-branded hotels
  • Marriott - Sheraton, Starwood, Ritz-Carlton, Residence Inn and all other Marriott-branded hotels
  • Wyndham - Travelodge, Super 8, Knights Inn, Ramada, Days Inn, Howard Johnson's and all other Wyndham-branded hotels

This lawsuit seeks reimbursement for consumers who paid high prices for hotel rooms and an injunction from the court to force the hotel chains to end their deceptive marketing practices.

If you booked a hotel room online in 2015, 2016 or 2017, you may have paid too much. Find out your rights to potential compensation.

“Instead of honest competition, these hotel chains chose to cheat the system and deceive their customers,” said Steve Berman, managing partner of Hagens Berman. “We believe consumers deserve payback from defendants for their deceptive advertising practices."

"Millions of consumers have collectively been upcharged by billions of dollars since 2015," Berman added.

The hotel overpricing scheme
The lawsuit states that each hotel defendant agreed to refrain from using certain online advertising methods to compete for consumers. The agreement prevents competitors from bidding for online advertising that uses competitors’ brand names. For example, Hilton Hotel declined to bid on keywords that would allow its ads to appear in response to internet searches for Hyatt. This makes it more difficult for consumers to get information about competing hotels, and to compare and contrast competitive information, such as price and quality, between the two hotels.

By agreeing not to advertise in response to searches for competitors’ brands, these hotel chains have effectively reduced the ability for consumers to conduct a reasonable comparison between various hotel chains to get the best price for their hotel rooms. This leaves hotel chains with free reign to keep prices high, with no threat of consumers seeing competing ads.

To increase their hold on the hotel market, defendants also forced their hand with online travel agencies (such as Priceline.com or Expedia), to keep them from bidding on branded keywords as well.

Online travel agencies need access to hotels' room availability and other information. In exchange, these hotel chains made the travel agencies play by their rules, keeping them from advertising for their branded keywords, thus making it less likely consumers would see the choices available on those online travel agency websites.

Hagens Berman represents consumers against major hotel companies that conspired to reduce competition and raise consumer prices. If you booked a hotel in 2015, 2016 or 2017, you are encouraged to join this class action.

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5 Comments

  • Robert Rauch March 20, 2018 11:33 AM Reply

    This is a lawsuit that is both frivolous and without merit. Hotel chains were not advertising to promote themselves in certain keyword searches because it is not professional nor is it ethical. The refraining from advertising did not cost consumers any money. This is akin to the drive-by lawsuits we see every year. I hope the plaintiffs lost the suit, pay too much in legal fees and go away.

  • Max Starkov, HEBS Digital March 20, 2018 12:02 PM Reply

    A lawsuit like this one is one of the reasons why people do not like lawyers very much. There is no "overpricing scheme" here, these are simply best practices existing in all industry verticals, existing for years. Not bidding on your competitors' brand names is not a new thing - this has been industry's best practices since 2001! Why? Several reasons: a) Marketing 101: in your online advertising you do not do things you would not do in your traditional, offline advertising, ex. Hilton posting a print ad with the message " Coming to New York ? Don't stay at Marriott, stay at Hilton - we are better and cheaper." b) trademark protection: you cannot just use marks of your competitors for your own economic benefit: Marriott will sue Hilton if they use Marriott's trademarks in their advertising, in this case bidding on Marriott's keyword terms. The same applies to the OTAs, and c) deceptive advertising: if a travel consumer searches for "Marriott in Midtown Manhattan", and a sponsored listing by Hilton pops-up in the search engine results pages, this would be a "bait and switch" type of misleading advertising. In other words: we are witnessing another sleazy lawsuit against the industry in the name of fictitious consumers!

  • Theo Ocks March 26, 2018 6:04 AM Reply

    Poor effort by HNN. Posting this without providing any editorial comment, simply copying the lawyers one sided perspective does a disservice to your readers.
    Without taking position in this, there are some very good reasons why this happens, primarily actually trying to save customers money by not having hotel companies outbid each other (raising costs) on their own brand names. If hotels would stop this practice, the only winner would be Google Ads, with the consumer losing most.

  • Kennedysdad March 29, 2018 8:40 AM Reply

    You accuse these lawyers without researching into the statements made to see if there is some truth to the article? I'll help you, starting with marriot. Marriot merged with interval international which is an exchange company for timeshare. ILG is the parent company of interval international and marriot (hope you can keep up ) and ILG merged with Priceline..............next we should look into investments firms and REIT's that fund these companies and you will easily and clearly see over the past 8 to 10 years that they have purchased and sold many properties between them back and forth. Look up apollo, accor, IHG,cendant,and many more .

  • Kennedysdad March 29, 2018 8:45 AM Reply

    Look up ILG. They are the parent company interval international (timeshare exchange company).They merged with marriot last year and they also merged with Priceline. Cendant is the parent company of Wyndham and also rci (the other timeshare exchange company) which are merging into one company and they have deals with Expedia .

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