Expedia can decide to pick its spots when it decides to play hardball over the hotel tax issue, but will it need to change its strategy as more cities follow in Arcadia's footsteps?
Author: Dennis Schaal
The people had their say, and Expedia and its sibling brands didn’t like it and left town.
Arcadia, Calif., population 60,000 and about 20 miles east of Los Angeles, is home to Santa Anita Park and will host the Breeders’ Cup World Championships in November.
But, if you are an Expedia customer, you’ll have to book a room outside the city for the races because the online travel agency has pulled up stakes.
It turns out, according to the San Gabriel Valley Tribune, that after voters approved a city council measure forcing online intermediaries to pay the municipality’s 10% hotel occupancy tax, Expedia and sister companies Hotels.com, Hotwire, and Egencia opted to cease offering hotel rooms in Arcadia.
Arcadia is not New York City
When New York City decided to impose a hotel occupancy tax on intermediaries a couple of years ago, Expedia stuck around, but it has more options when it comes to a much-smaller city such as Arcadia.
It has similarly dropped out of other smaller towns around the country, when push came to shove on taxes, as well.
“It’s creating a ruckus with a lot of hotel companies in the area,” says an Arcadia hotel general manager who declined to identify himself because statements to the press have to go through the chain’s headquarters.
The general manager says he can’t directly correlate the action to Expedia’s exit, but leisure travel is down and he’s had to reduce the staff’s hours on weekends.
Trickling down to the gas pump
And, he claims Expedia’s departure has not only been felt in area hotels — the city’s website lists eight, ranging from Embassy Suites to Hilton Garden Inn and Motel 6 — but also in Arcadia’s restaurants and gas stations.
“It kind of has a ripple effect,” the hotel general manager says.
He was especially angered at what he described as Expedia’s practice of showing on its websites that rooms in Arcadia were “sold out,” when plenty were available on other websites or by phoning the hotels.
If Expedia indeed was doing that, it wasn’t visible on Expedia.com today.
The old switcheroo
However, there were bait and switch tactics in play.
When you search Expedia.com for Arcadia, Calf., hotels, the search results page says “35 matching hotels found in Arcadia,” although none are actually in Arcadia. Instead they are scattered throughout Pasadena, Los Angeles, and surrounding towns.
And when you click on an Expedia ad for “Arcadia hotels up to 40% off,” as part of the Expedia Unpublished Rates Hotels program, you find 32 hotels “near Arcadia,” with all of them outside the city limits.
Looking at the issue from both sides now
The Arcadia hotel general manager says he can see both sides of the hotel tax issue, which has dogged the online travel agencies for about eight years as local governments try to require them to pay taxes on the retail rates they charge consumers instead of merely the sending along taxes on the net rates they get from the hotels.
Still, he says, local hotels got no advance notice from Expedia.
“No notification, no nothing,” the general manager says.
And, he thinks the Arcadia city council should have considered the wide-ranging impact the initiative is having on the entire city and not just its hotels.
“I think the city should re-look at the issue,” the general manager adds.
Expedia didn’t immediately respond to a request for comment.
Priceline and Orbitz, which like Expedia are subject to the tax, continue to sell hotel rooms in the city.
Hotel activists sometimes argue that hotels should just take back control from the online travel agencies and quit giving them rooms to sell.
But, when you consider Expedia’s marketing power, that is easier said than done.