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source: Hotel News Now:

Florida becomes first US state to sue Expedia, Orbitz for room taxes

REPORT FROM THE U.S.—Florida has become the first U.S. state to join the ever-growing ranks of municipalities suing online travel agencies over alleged failure to remit taxes.

Expedia, Orbitz LLC and Orbitz Incorporated have been targeted by the state’s attorney general’s office, which claims the OTAs owe the state tax money for the rooms they have sold to consumers. The state claims the OTAs are only remitting taxes on the discounted rate at which the rooms are sold, rather than the full price of the room.

“Consumers are already paying ‘taxes and fees’ when purchasing a Florida hotel room online, yet the online travel companies have been keeping too much of those taxes as profit,” Florida attorney general Bill McCollum said in a statement. “If these taxes are due to the state, the companies should pay them for the benefit of the people of Florida.”

The lawsuit, filed in state circuit court in Tallahassee, Florida, does not clarify how much tax the state believes to be unpaid. Sandi Copes, a spokeswoman for the attorney general, said in an e-mail the amount of taxes unaccounted for from the OTAs is in the “millions” annually.

Download a copy of the lawsuit as a PDF.

Brent Thompson, vice president of government affairs for Expedia, said the company does not remit taxes to hotels on the service fees charged to customers because it does not consider the fees to be a part of the rent for the room. But, as has been alleged in the Florida suit, he said the attorneys are telling the municipalities that Expedia and other OTAs are holding onto a portion of the taxes owed as profit, a claim he denies.

“The cities hear this and they say, ‘There’s a problem here,’” he said. “If the facts were true, there would be a problem there. But it’s not true. It’s the proverbial bloody shirt.”

He added, “The law is in our favor and the consumers’ favor.”

Orbitz representatives did not return calls for comment.

Andrew Weinstein, a spokesman for the Washington, D.C.-based Interactive Travel Services Association, disputed the attorney general’s claim.

“Every penny owed in taxes is remitted to the hotels,” he said.

Weinstein also said it is “flat-out false” that OTAs purchase groups of rooms to be resold at a lower price.

“We are playing an intermediary role in the same way that traditional, offline travel agents have to help find (people) hotel rooms,” he said. “We are compensated for that.”

Florida’s tourism industry might suffer as a result of the litigation, Weinstein said.

“Our perspective is that the lawsuit will hurt the millions of Floridians who depend on the travel-and-tourism industry by making it harder and more expensive to bring tourism to the state,” Weinstein said.

Through September 2009, Florida’s occupancy was down 8.5 percent to 57.9 percent, according to Smith Travel Research. The state’s average daily rate was US$107.63 (down 10.8 percent from the previous year), and revenue per available room was US$62.31 (down 18.4 percent).

Buon lavoro e buon revenue management a tutti!

Riccardo