After a series of lawsuits, newly expressed interest in a case by the DOJ and FTC could signal more scrutiny over alleged hotel pricing collusion.
The U.S Department of Justice is ramping up its scrutiny of how algorithmic price-fixing impacts consumers across multiple verticals, including the hotel industry. The latest news came late last week when the Federal Trade Commission (FTC) and the Justice Department’s Antitrust Division filed what’s known as a “statement of interest” with the District of New Jersey in the case of Cornish-Adebivi v. Ceasar’s Entertainment, according to a press release issued by the FTC.
In its press release, the FTC explained that “hotels cannot collude on room price and cannot use an algorithm to engage in practices that would be illegal if done by a real person.” An increasing number of companies, regardless of the industry, are relying on algorithms to determine price, according to the FTC.
“When a small group of algorithm providers can influence a major segment of a market, competitors are better able to use the algorithm provider to facilitate collusion,” the FTC stated. “This risk is even greater as markets have become more concentrated across a wide range of industries.”
Hotel industry insiders said that this could be the tip of the iceberg for further scrutiny with this news coming after other lawsuits initiated last month. An antitrust class action suit launched in Washington Western District Court accuses major hotel chains of conspiring to fix hotel rates by exchanging data through Smith Travel Research, a market analytics platform owned by CoStar Group.
A similar lawsuit was launched on March 1 in Illinois Northern District Court over hotels’ use of Amadeus Hospitality’s analytics platform Demand360. The lawsuit accuses multiple major global hotel companies as well as Amadeus IT Group and Amadeus Hospitality Americas of violating antitrust laws by allegedly allowing hotel companies to gain insights, including 12-month forward-looking data, these companies would previously not be privy to in the past. “Armed with the occupancy data from Demand360, Hotel Defendants no longer need to cut prices to fill rooms but can increase (and maintain) artificially inflated rates based on otherwise proprietary information about competitors’ room supply,” the lawsuit claims.
