Los Angeles Sues Online Travel Bookers

Los Angeles -- This city is suing several online travel bookers, claiming the companies owe the city millions of dollars in unpaid hotel occupancy taxes.

Named in the lawsuit, filed last week in Superior Court here, are such well-known Internet travel bookers as Priceline, Orbitz, Travelocity, Hotwire, and Expedia.

The lawsuit claims the companies pay room taxes based on the price they pay hotels for room inventory but collect the city's 14-percent occupancy tax on the full price they charge customers, which typically includes a bookers' mark-up.

"They can't charge consumers taxes based on retail price but give back to the city only part of the money," said Katie Buckland, a spokeswoman for City Attorney Rocky Delgadillo. "The Web sites can't have it both ways."

In response, Art Sackler, executive director of the Interactive Travel Services Association, said, "The claim that ITSA members do not remit collected taxes is false. The city's hotel tax does not apply to online travel companies which are not hotel operators and do not collect rent. These companies provide valuable services to assist consumers with booking hotel rooms."

IAC/InterActiveCorp, which owns Expedia, Hotwire and Hotels.com, called the lawsuit "entirely without merit."

The company stated that it does "not pay occupancy tax on hotel customer payments that it retains for the intermediary services."