Expedia, not inflation, is to blame for higher hotel prices, class-action lawsuit alleges

The suit alleges the company “has abused its monopoly power to impose exclusionary contracts and pricing algorithms on hotels in violation of the federal antitrust laws.” That, it says, has resulted in consumers having to pay “artificially inflated prices” for hotel rooms across the U.S.

In addition, the complaint alleges, consumers pay higher rates regardless of whether they use Expedia’s online site or the hotel’s official website.

Expedia, in a statement to Moneywise, denied all these allegations.

“The allegations in the lawsuit are meritless,” a spokesperson said. “For over 30 years, Expedia has brought transparency to shopping for travel, allowing travelers to see different travel options, make informed travel decisions, and get competitive offerings and better value from travel suppliers.”

Commission concerns

Expedia’s commissions are at the heart of the problem, says the suit. The site charges hotels a 15% commission on bookings made through one of its online portals. That, argue the plaintiffs, has resulted in hotels charging travelers as much as 30% more to recoup any lost profits.

Expedia is the flagship site of Expedia Group, a conglomerate that controls several of the biggest online travel portals, including Hotels.com, Vrbo, Travelocity, Hotwire, Orbitz, and Trivago. The lawsuit alleges 80% of all U.S-based online bookings happen on one of the company’s sites.

“Expedia’s anticompetitive Scheme has injured virtually every consumer who has booked a U.S. hotel room — whether through Expedia or not,” the suit reads.

The plaintiffs are proposing two different classes to the court: People who booked a hotel room directly with the facility and another for people who booked online. The suit is seeking both financial penalties and a permanent injunction that would prevent the travel site from re-imposing its allegedly exclusionary contracts and pricing algorithms.

Rising costs

Hotels are just a part of the travel equation for tourists. And they’re not the only field seeing big price increases.

Airfares have increased 22.4% over the past year, according to the Bureau of Labor Statistics. And, for people who prefer to drive to their destination, the average price of gas has jumped roughly 40% in the past year, says AAA.

Despite the higher prices, 71% of the people surveyed by PwC in May said they planned to spend the same or more on summer travel as they did the year prior. The average spend per consumer worked out to $2,892.