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Online Travel Sites Not Required to Pay Hotel Taxes

The Los Angeles Superior Court ruling is the first of its kind nationwide.

February 28, 2010

Last month, a Los Angeles Superior Court judge ruled that online travel booking sites such as Expedia, Hotels.com and Priceline.com are not required to pay Anaheim, Calif., hotel taxes of $21.3 million for rooms booked over the Internet — the first ruling of its kind nationwide. Similar lawsuits have been filed in San Diego and San Francisco and other states.

Many of the lawsuits revolve around the complicated pricing operations that the online travel sites use to book clients, whereby the online sites are only required to pay taxes on the rate at which they purchased the room — not the rate that the individual guest has paid.

An attorney for the online travel companies involved — which included Priceline, Expedia, Orbitz, Hotwire, Hotels.com and Trip Network Inc. — said in a statement: “We are heartened by the court’s decision and hope it will encourage other municipalities to work with [online travel companies] to increase tourism through cooperation, rather than wasting time and energy on frivolous litigation.”


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