City of Anaheim recovers underpaid tax from online travel agents

In a first, online travel agents (OTAs) have been sued and lost over the issue of transient occupancy taxes (per night tax charges in hotels) after years of underpaying. The OTAs in question Expedia, Hotels.com, Orbitz, Priceline, Hotwire, and Travelocity will have to pay up $21.3 million for underpaid taxes, penalties, and interest. The OTAs will be required to pay the 15 percent transient occupancy taxes on the difference between the wholesale and retail rates of hotel rooms they purchased and resold in Anaheim between 2000-2008.


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Something this is likely to cause is the OTAs increasing their commission levels a bit, so that it's harder to get the super low hotel room rates that we all want as travelers. It's also likely to mean there will be more lawsuits, as this is so far only one town in one state. The losses these lawsuits will generate could make one or more of these online travel agencies take on more funding or even be bought by a rival company.

We'll see what happens with the lawsuit and bargain hotel rates as a result. In the meantime, my favorite hotel booking site is Hotelscombined.com, which seems to dig out great rates when I use it.

You should follow me on twitter here.

Last updated by Jack on 21 July, 2011 in Travel News.

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