Originally Published on forbes.com on March 3rd, 2012
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A while I go I wrote a piece calledIs Expedia Stealing From Its Customers ? I heard from somebody at Expedia about it. I was referring to the practice of having a “tax recovery charge” that was greater than the amount of room tax actually paid by Expedia to the hotel operator to be passed on to the locality. The Expediarepresentative wrote that they always won when the issue was contested in court, but that was not really accurate. The various cases on the issue do not seem to have an overarching federal constitutional principle involved, so they turn on the precise wording of state statutes and local ordinances and principles of state constitutions. You probably will not be shocked to learn that the cities are not fighting to have Expedia make refunds to their visitors. They want the money for the cities. The City of Brotherly Love recently got bad news from the Commonwealth Court of Pennsylvania. The Commonwealth Court upheld a lower court decision denying the city a little over a million dollars that it was seeking from Expedia for the years 2001 to 2005. As with many of these decisions it turned on precise definitions:
Ultimately, the trial court and Board concluded that Expedia did not fall within the definition of “operator,” with the Board specifically holding that Expedia did not “possess the right to rent or lease” hotel rooms, the very provision upon which the City primarily relied in support of its argument that Expedia was an “operator.” The record supports such a conclusion and holding.
If you check the fine print on the Expedia site they explain the whole “tax recovery fee” concept, so it is not stealing. It is just annoying.
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