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Luxury Hotel Chains Accused of Price-Fixing Scheme, Lawsuit Alleges

 |  February 25, 2024

In a recent legal development, prominent hotel chain operators including Hilton Worldwide Holdings Inc., Hyatt Hotels Corp., Inter-Continental Hotels Corp., Marriott International Inc., and Accor Management find themselves embroiled in a lawsuit alleging collusion to inflate luxury hotel room prices. The lawsuit, filed in the US District Court for the Western District of Washington, accuses these industry giants of engaging in anti-competitive practices facilitated by a price-setting database.

The complaint, lodged on Tuesday, outlines that customers seeking luxury accommodations were allegedly subjected to inflated prices due to a clandestine agreement among the hotel chains to share confidential information regarding pricing, supply, and future strategies. Acting as the intermediary in this alleged scheme is Smith Travel Research (STR), a division of CoStar Group Inc., named as co-defendants in the lawsuit.

According to the plaintiffs, STR facilitated the exchange of competitively sensitive data, allowing the accused hotel operators to gain insights into each other’s pricing strategies and adjust their own prices accordingly. By having access to detailed and non-public information through STR, the defendants purportedly manipulated the market dynamics, stifling competition and enabling them to charge higher prices for luxury accommodations.

“The agreement to regularly exchange detailed and non-public information about current supply and pricing suppressed competition between the defendants,” the lawsuit states. “The information exchanges allowed defendant hotel operators to compare their prices and occupancy with their competitors and to raise prices when they were lower than competitors.”

The implications of such alleged collusion extend beyond individual customers to the broader hospitality industry. If proven true, this coordinated effort to control pricing could have far-reaching consequences for consumer choice and market competition within the luxury hotel sector.