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13 commentsFriday, May 30, 2008

Houston Files Lawsuit Against Online Travel Companies

Wants occupancy tax

The city of Houston has filed a lawsuit against online hotel bookers for keeping money the city claims should go towards its occupancy tax.

"We believe the (online) companies are, essentially, pocketing the money that should go to occupancy tax," Mayor Bill White told the Houston Chronicle. "It's unfair to those who are paying the price where the full taxes are paid."

The lawsuit is similar to one in San Antonio that won approval for class-action status this week, allowing other cites in the state and nation to join the suit. Houston says it will pursue its own case for now.

If the lawsuit is successful, White said it should not hurt tourism in Houston. "The Internet companies are obligated to charge a certain percentage of what they've collected," he said. "It should not affect hotel rates."

Hotels in Houston are required to pay the city the hotel-occupancy tax of 7 percent, based on the price of the rooms they sell. The city brought in $57 million in occupancy taxes in 2007.

On Tuesday, a federal judge granted San Antonio's motion for class-action certification in its lawsuit against 16 companies including Hotels.com, Expedia.com, Priceline.com and Orbitz. The San Antonio suit alleges the online companies collect hotel tax at the retail rate but only pay taxes on the bulk wholesale rate they are charged.

The companies maintain they do not control occupancy and only offer a service for customers and should not have to pay the difference. They say the suit could hurt tourism.

"It just doesn't make sense that increasing the costs of travel won't decrease the amount of travel," said Paul Chronis, Orbitz's lawyer. "That's pretty basic stuff."

 

About the author:
Mike is a staff writer for WebProNews.

Whaaa?

Um...I live in Houston and I wasn't aware that my city was a tourist destination.  I mean, unless you're traveling for business or trying to catch a peek of Janet Jackson's nipple why would you come here....tourism...really? I mean...really????

Incidentally the occupancy tax was put in place by Houston on rental cars and hotel rooms to pay for the construction costs of Minute Maid Park & Reliant stadium. I'm sure they've more than made their money back. Houston has a way of passing laws to tax things or add tolls to pay for construction costs...and then when the construction costs are covered they don't repeal the tax or tolls and end up raising property taxes. Yay taxes....is it just me or are Americans getting taxed to death? 

I say get the TAX from ORBITZ, TRAVELOCITY, HOTWIRE, ET AL

Why should a online booking engine like those mentioned be allowed to keep the tax collected instead of it going to the righful source.  IF they did not collect the tax, then that would be a different issue. But since they apparently do collect the tax, then it should go to the local government whose has imposed the tax.  That is only fair and reasonable.

HOWVER several of the online booking engine are tettering on bankruptcy and probably starying alive with that money.  It is not logical that an online booking engine can sell rooms, or airline tickets, or car rental below the rate the hotel, airline or car rental company sells. 

Unfortunately with advent of the internet, and therefore online booking engines, people have the feeling they are saving money, UNTIL there is a cancellation or change issue.  We get calls everyday to help clients who have bought and prepaid for hotels, car rentals, and hotels, and neglected to read that there is NO REFUND if cancelled. 

The online booking engines are losing customers back to "real" travel agents every day.  Once the client gets burned by an online booking engine, they go back to their travel agent.

Lesson to be learned, always use a professional travel agent for business or personal travel, and always buy travel insurance.

During the recent AAmerican AAirlines debacle where the flights were cancelled for serveral days, ALL of our clients were re-accommodated in MINUTES.  NONE of them stood in long lines, certainly none of them were stranded for hours or days.  They emailed us, or called us, and we re-accommodated them on another airline in minutes.

Use a travel agent, save youself some grief, and money!

JESS Kalinowsky

Professional Travel Consultant

      

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