Fight Fire with Fire: Major Hotel Chains Respond to OTA Tax Inequity by Launching Room Key Website
As we reported previously, the relationship between online travel agencies (“OTA”s) and hotels has been a strained one. Hotel owner and operators argue that they are at a significant competitive and fiscal disadvantage by exempting OTAs from paying taxes to state and local governments on the total guest room revenues they receive for online bookings. In fact, the uncertainty involving taxation of OTAs in Florida recently led to Florida State Representative Jason Brodeur and Senate Majority Leader Andy Gardiner filing identical bills (HB 1393 and SB 1888) that would make clear that OTAs do not have to pay a disputed portion of bed taxes.
Earlier this month, Choice Hotels International, Wyndham Hotel Group, Marriott International, Hyatt Hotels, Hilton Worldwide and InterContinental Hotel Group joined together to form the Room Key website. The stated mission of Room Key is to “offer travelers direct access to a broad network of hotels around the globe, provide accurate and comprehensive information, make it easy for travelers to discover what’s right for them.” Essentially, Room Key cuts out the OTA middleman and drives consumer traffic to the six partner hotel websites.
Apparently, the idea isn’t a novel one, as several hotel chains previously looked into forming a similar platform. The idea was dismissed, however, because of the purported appearance that the hotel participants would be engaged in anti-competitive price-fixing activities. According to The Room Key model avoids anti-competitive behavior, apparently, by requiring the customer to finalize reservations on each hotel’s website, rather than on the Room Key platform.
At last week’s ALIS conference, several panelists debated whether or not Room Key will be met with any success. Amongst the main criticisms was the belief that other OTAs have a significant head start and market penetration and the inability for customers to package other aspects of their travel, including rental car and airline tickets.