Major online travel agencies really showed 'em in the "show-me state" of Missouri, where the state's highest court handed them a win on the hotel tax issue.
In a unanimous ruling June 28, The Missouri Supreme Court affirmed a circuit court ruling dismissing a St. Louis County and St. Louis Convention and Visitors Commission lawsuit againt major OTAs, including Expedia, hotels.com, Hotwire, Priceline, Travelocity, Travelport, Orbitz, OneTravel and others.
The suit alleged that the OTAs short-changed the county on hotel and tourism taxes by remitting taxes on the net -- and not the retail -- rate of hotel rooms when selling hotel stays using the merchant model.
The lower, circuit court initially dismissed the suit because in the interim the Missouri House Representatives had passed a law stipulating that hotel operators alone are liable for travel and tourism taxes, and travel agents and intermediaries are not.
The law states, in part: "Under no circumstances shall a travel agent or intermediary be deemed an operator of a hotel, motel, tavern, inn, tourist cabin, tourist camp, or other place in which rooms are furnished to the public unless such travel agent or intermediary actually operates such a facility."
The plaintiffs appealed to the Missouri Supreme Court and argued that their suit against the OTAs should be reinstated because the new tax law illegally wiped out tax liabilities that existed before the law went into effect.
But, the OTAs argued -- and the Missouri Supreme Court agreed -- that the plaintiffs waived their right to challenge the tax law because St. Louis County and the CVC did not challenge the law at the earliest opportunity, as required.
Despite the OTAs' legal win in Missouri, their litigation worries are not going away any time soon.
For example, in a quarterly financial filing April 29, Expedia Inc. lists 17 lawsuits filed by states, cities and counties during the first quarter of 2011.
Note: Here's an explanation of why Missouri is often referred to as the show-me state.