Expedia hit with antitrust class action over algorithm pricing scheme

A class of consumers claim the massive online travel agency has forced hotels to raise prices across platforms, impacting even consumers who don't use Expedia.SEATTLE (CN) — Consumers targeted Expedia in an antitrust class action accusing the online travel agency of imposing exclusionary contracts and pricing algorithms to exploit customers.The plaintiffs — Ronisha Andrews, Pak Seong Hoi and Lorraine Rocci — seek to represent two classes of consumers, those who directly booked certain hotels after October 2022 and those who used a non-Expedia online travel agency to book a hotel during that time period.“We allege that Expedia has abused its monopoly power in the online travel agent market to inflate prices for hotel rooms to millions of consumers even when those consumers did not use Expedia,” Eric L. Cramer, attorney representing the consumers, said in an emailed statement. “We look forward to bringing our case before a jury in Seattle, and to holding Expedia responsible for harming the members of our proposed classes of hotel consumers.”The consumers say they overpaid for accommodations due to Expedia’s conduct, even when they used other sites to book.According to the consumers, Expedia facilitates almost 80% of the gross booking value of transactions between U.S. consumers and U.S.-based hotels. Because of Expedia’s domination in the market, they say the company can charge the hotels steep commissions, which results in the hotels raising prices to recover the cost and remain profitable.The consumers also accuse Expedia of abusing its monopoly power by forbidding certain hotels from offering lower rates on their own websites and punishing hotels that post lower rates on other online travel agency sites, like Booking.com or Priceline, by demoting them in search results.“As a result, and due to the challenged conduct, hotels must artificially inflate the prices in the direct-booked channel even though it is less expensive to sell through that channel,” the consumers write.The scheme also prevents rival booking companies from incentivizing hotels to charge lower prices on their platforms and suppresses competition, the consumers claim.The consumers identified some of the largest hotel chains in the country as being impacted by Expedia’s conduct, including Marriott International, Hilton Worldwide, InterContinental, Wyndham, Hyatt, Best Western and others.“Expedia’s challenged conduct raises artificial barriers to entry and expansion in the hotel [online travel agency] market by denying actual and potential rivals the most effective tool for gaining market share: the ability to offer consumers lower hotel prices by charging hotels lower commission,” the consumers write.The anticompetitive conduct has degraded online travel agency service quality across the market, the consumer’s claim.“Insulated from the competitive discipline that would otherwise have forced Expedia to compete on the non-price dimensions of service, transparency, and remediation, Expedia has maintained opaque fees, restrictive refund and cancellation policies, and unresponsive customer service that a competitively disciplined [online travel agency] would have been forced to correct,” the consumers write.The consumers accuse Expedia of diminishing incentives to compete on quality in areas like customer service, booking functionality and “more efficient, lower-cost distribution methods.”The consumers say this conduct violates the Sherman Act and the Clayton Act, both of which restrict anti-competitive conduct.The consumers are asking the court to find Expedia violated federal antitrust laws and block the company from continuing its pricing scheme.Expedia did not respond to a request for comment before press time.Subscribe to our free newslettersOur weekly newsletter Closing Arguments offers the latest about ongoing trials, major litigation and rulings in courthouses around the U.S. and the world, while the monthly Under the Lights dishes the legal dirt from Hollywood, sports, Big Tech and the arts.Additional Reads