Hotel Chains Colluded to Artificially Raise Extended Stay Room Rates, Class Action Lawsuit Alleges
Gonzalez et al. v. Integrated Decisions and Systems, Inc. et al.
Filed: September 10, 2024 ◆§ 1:24-cv-08262
Several big names in the hotel industry face a class action over an alleged scheme to artificially raise the prices of extended stay hotel guest room rentals.
Several big names in the hotel industry face a proposed class action lawsuit over an alleged scheme to artificially raise the prices of extended stay hotel guest room rentals.
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The 192-page antitrust lawsuit claims Hilton, Extended Stay America, Sonesta Hotels, Choice Hotels, Wyndham Hotels & Resorts and Hyatt Hotels have collaboratively used the same software product to set guest room rates and occupancy levels at their respective extended stay hotels. The complaint says the AI-powered software—known as the G3 RMS and developed by co-defendants IDeaS and SAS Institute—generates these pricing and occupancy decisions using confidential business data the hotels continuously submit.
“Extended stay hotel defendants did not always collectively rely on a shared brain to price their extended stay hotel guest rooms in the coordinated manner alleged herein,” the suit shares. Before hotels adopted the G3 RMS algorithm—starting with Hilton in 2013 and most recently followed by Hyatt in 2022—they historically determined their guest room rates independently from one other in response to ordinary market forces, the case explains.
Now, the hotels all rely on the same algorithm that uses the same type of non-public data to generate the same type of “optimal” pricing and occupancy decisions for each one to adopt, the filing contends.
“This is not how genuine competitors should make independent pricing decisions in properly functioning markets,” the extended stay hotel lawsuit asserts. “But that is what has occurred here.”
The case claims that the defendants’ alleged conspiracy has allowed them to charge excessively high rates for extended stay guest rooms while artificially limiting the availability of these rooms nationwide. The lawsuit is specifically concerned with the anticompetitive effect the defendants’ alleged misconduct has had on the extended stay hotel market in the Riverside-San Bernardino-Ontario, California and Tampa-St. Petersburg-Clearwater, Florida metropolitan areas.
According to the complaint, the hotels’ price-fixing scheme comes at the expense of consumers, especially those in more financially vulnerable positions with little to no choice but to rent extended stay hotel guest rooms.
“These individuals include workers whose jobs require them to travel away from home for extended periods of time, like travelling nurses, construction workers, and military personnel. These individuals also include people whose permanent housing arrangements have become less predictable or stable, such as those whose homes have been damaged or destroyed by natural disasters or who have been forced to leave their homes to escape serious familial or marital strife. Individuals harmed by [the defendants’] scheme also include those who simply cannot afford to live in apartments whose rents have become increasingly expensive.”
Per the filing, extended hotel brands operated by the defendants include Homewood Suites, Home2 Suites, Extended Stay America Suites, Extended Stay America Select Suites, Extended Stay America Premier Suites, Sonesta ES Suites, Sonesta Simply Suites, WoodSpring Suites, MainStay Suites, Suburban Studios, Hawthorn Suites and Hyatt House.
The class action lawsuit looks to represent all persons and entities in the United States and its territories who have directly purchased an extended stay hotel guest room for rent in the Riverside-San Bernardino-Ontario, California or Tampa-St. Petersburg-Clearwater, Florida metropolitan areas from one or more of the defendants mentioned above or their co-conspirators, or from any division, subsidiary, predecessor, agent, or affiliate of these entities from no later than January 1, 2016, until the defendants’ allegedly unlawful conduct and its anticompetitive effects stop.
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