Chicago judge rules against OTAs
By Danny King / Travel Weekly
A Chicago judge has ruled that online travel agencies (OTAs) such as Expedia, Priceline, Orbitz and Travelocity must pay hotel taxes on total gross retail room rates at the city's hotels, not just on the wholesale rates the OTAs pay hoteliers.
The judgment marks what appears to be the highest-profile victory to date among the more than two dozen legal battles waged by local taxing authorities against the OTAs in recent years.
In his June 21 decision, Cook County Circuit Judge Robert Lopez Cepero said that OTAs using the merchant model, in which guests pay OTAs for their stays inclusive of the OTA markup up front, differ materially from traditional agents who secure the booking up front but receive a payment in the form of a commission on the back end.
"There exists a significant difference in the way travel agents operate under an agency model and the way defendants operate under the merchant model," Cepero wrote in his decision.
The ruling is notable because Chicago is the third-largest U.S. hotel market. The city's 108,000 rooms trail only Las Vegas' 169,000 and Orlando's nearly 119,000, according to Smith Travel Research...