Hilton, Hyatt, Marriott Class Action Alleges Hotel Pricing Conspiracy

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A Virginia woman has filed an antitrust class action lawsuit, alleging more than half of the U.S. hotel room market is affected by a conspiracy to manipulate online hotel reservations.

Plaintiff Karen Tichy says that since 2015, an anticompetitive agreement has been in place among defendants Hyatt, Hilton, InterContinental, Marriott, Choice Hotels International, and Wyndham Worldwide.

She claims these hotels have been causing consumers to pay more for online hotel reservations by restricting the hotel advertising that shows up in internet search results.

The defendant hotels control about 60 percent of the hotel room inventory in the U.S., Tichy says. They own dozens of familiar hotel brands like Holiday Inn, Travelodge, Ramada, Howard Johnson’s, Crowne Plaza, Waldorf Astoria, Comfort Inn, and many others.

“The scheme is simple: each hotel Defendant agreed it would refrain from using certain readily available online advertising methods to compete for consumers shopping for hotel rooms,” according to the Hilton, Hyatt, Marriott hotel antitrust class action lawsuit.

The hotels allegedly agreed to refrain from using each others’ brand names to create online advertising that would present consumers with comparison online hotel reservations. So, for example, Hilton would refrain from bidding for online ads that would present its own amenities next to comparison products from Hyatt, and Hyatt would do the same in its own advertising.

The scheme allegedly prevents consumers from seeing advertisements from a variety of competing hotels when they use an internet search engine like Google or Bing to find online hotel reservations, the hotel antitrust class action lawsuit says.

Ordinarily, a potential hotel patron who searches for “Hilton” will get search results for other hotels like Marriott or Hyatt, in addition to those for Hilton. But by declining to bid for advertising that uses their competitors’ names, the defendant hotels allegedly prevent those competing advertisements from showing up in search results.

Tichy says the alleged agreement wasn’t limited to the defendant hotels but that they also roped in online travel agencies, which advertise hotel rooms in exchange for commission payments from the hotels. When the hotels agreed in 2015 to refrain from bidding from each other’s branded keywords, Tichy claims, they also agreed to add contractual provisions preventing their online travel agency partners from doing the same.

“Absent Defendants’ anti-competitive and illegal agreements and conduct, Plaintiff and other Class members would have paid less for each of the hotel rooms purchased during the Class Period, and would have incurred lower transaction costs,” the Hilton, Hyatt class action lawsuit states.

Tichy recalls that from 2015 to 2017, she noticed seeing fewer competitive advertisements when she searched for hotel rooms using Google. She says the lack of options drove her to purchase hotel rooms directly from the hotels’ own websites.

Were it not for the defendant hotels’ allegedly anticompetitive behavior, Tichy claims, she could have found a better price. Instead, she alleges that she and the proposed Class Members paid more for online hotel reservations than they should have had to.

Tichy is proposing to represent a plaintiff Class that would include all U.S. persons who from Jan. 1, 2015 through the present paid for a room reserved through the defendant hotels’ websites or through any online travel agency.

She seeks an award of damages and a court injunction barring the defendant hotels from continuing the allegedly anticompetitive behavior at issue.

Tichy is represented by attorneys Steve W. Berman, Eugene A. Burrus and Elizabeth A. Fegan of Hagens Berman Sobol Shapiro LLP.

The Hilton, Hyatt, Marriott Online Hotel Reservations Antitrust Class Action Lawsuit is Tichy v. Hyatt Hotels Corp., et al., Case No. 1:18-cv-01959, in the U.S. District Court for the Northern District of Illinois.