A state Superior Court judge, hearing claims from the cities of Los Angeles, Anaheim, Santa Monica, San Diego and San Francisco, issued a summary judgment, holding that the defendants are not hotel operators and are not subject to hotel occupancy taxes.
The case traces its roots 2004, when the City of Los Angeles became the first municipality to sue the OTAs for back hotel taxes, claiming that they operate hotels, control the room allotments, and should be subject to taxes on the full amount that consumers pay.
The OTAs, on the other hand, remitted payments for taxes back to the hotels merely based on the net rates they got from the hotels.
The City of Los Angeles alone in 2009 issued assessments against Expedia Inc. companies Expedia.com, Hotels.com and Hotwire for $29.5 million, for example.
The case eventually got consolidated with those of several other California cities.
“Our members maintain the same ambition now as we did prior to litigation: to successfully encourage travelers and tourists worldwide to discover and experience the state of California, which will ultimately drive increased tax revenues to county and state treasuries,” said Simon Gros, chairman of Travel Tech: The Travel Technology Association, which represents the OTAs.
It’s unclear whether the litigation ends here, or whether it will be appealed.