Class Action Lawsuit Claims Hilton, Wyndham, Hyatt, Others Illegally Conspired to Fix Hotel Room Prices

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A proposed class action lawsuit accuses six of the country’s largest hotel operators of illegally conspiring to fix hotel room prices nationwide.

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The 41-page antitrust lawsuit alleges that the operators of Choice, Wyndham, Hilton, Four Seasons, Omni and Hyatt have engaged in a price-fixing scheme whereby they have shared non-public, “competitively sensitive” room price and occupancy data with a third-party algorithm that aggregates the companies’ information and provides pricing recommendations in real time.

By outsourcing their pricing decisions to a shared algorithm instead of making independent choices with respect to room rates, the hotel chains have eliminated price competition and are able to charge supracompetitive prices for rooms, the suit claims. As a result, the case contends, consumers are footing the bill for “record-high” hotel room prices, even though there has been no corresponding increase in demand, as, according to the complaint, occupancy rates have remained at or below pre-pandemic levels.

The lawsuit also names as defendants analytics software company SAS Institute Inc. and subsidiary IDeaS Inc.—the developers of the revenue management system whose algorithm’s automated pricing recommendations have allegedly allowed the hotels to reap record profits in recent years.

The suit alleges that the defendants provide the IDeaS revenue management system with a constant stream of meaningful market data, such as public and non-public room rates, whether a consumer tried to reserve a room that was no longer available, the number of rooms available by room type and more.

According to the case, this information gives IDeaS a “clear and unparalleled view” of real-time market conditions, and allows it to generate pricing recommendations above competitive levels, which the hotel chains almost always implement, the complaint claims.

“By sending their sensitive confidential pricing and occupancy information to a third party to process, analyze, and develop supra-competitive prices, the [hotel operators] are able to achieve the same result as if they secretly met in a back room and exchanged their information and agreed to a supra-competitive price,” the filing argues.

To make matters worse, the shared market data is visible on the IDeaS platform to each hotel chain that uses it, meaning that each alleged conspirator is able to make sure their pricing stays in step with the others and “enforces discipline” on any that may attempt to undercut competitors’ rates, the lawsuit says.

The case asserts that the purported conspiracy has succeeded, as each hotel operator has been able to raise prices to the “highest or near-highest average rates for hotel rooms in its history,” despite a lack of equivalent increase in demand.

“All defendants knowingly participate in this unlawful conspiracy and profit from it,” the complaint charges. “The losers are [the plaintiffs] and the Class Members who pay inflated prices for hotel rooms affected by the conspiracy.”

The lawsuit looks to represent any individuals or entities in the United States and its territories that rented Choice, Wyndham, Hilton, Four Seasons, Omni or Hyatt hotel rooms within the U.S. at any time since April 26, 2020.

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