Major U.S. online travel agencies picked up a victory on the hotel tax issue Jan. 20 when a district court judge issued a summary judgment, dismissing hotel occupancy tax claims brought by the City of Houston, Harris County and the Houston Sports Authority.
The defendants' argued that the complaint should be dismissed because the OTAs do not control hotel inventory and the judge apparently agreed by dismissing the suit.
The Interactive Travel Services Association, which speaks for the OTAs on the hotel tax issue, stated:
"A summary judgment of this type shows that the language of Texas law is clear on this issue: Online travel companies are not hotels, and they should not be liable for hotel taxes. This ruling comes on the heels of a decision by the Sixth Circuit Court of Appeals to throw out similar allegations last month, making it the second appellate-level court to do so, and it continues to expand the number of judges and courts who have dismissed similar claims. We are heartened and gratified that the court issued this summary judgment, and we look forward to working with Houston and other Texas municipalities to promote travel and tourism through cooperation, not litigation."
The ruling in Houston stands in contrast to a decision last fall in San Antonio, Texas, in a class-action lawsuit brought on behalf of 173 of the state's municipalities. In that ruling, Expedia Inc., Priceline.com, Orbitz Worldwide and Travelocity were socked with a $20.6 million hotel occupancy tax tab as a federal jury concurred with the plaintiffs that the OTAs were "controlling hotels" when they offered rooms on a merchant model basis.