Feel like it’s hard to find a good deal on a hotel despite seemingly every other advertisement being for travel apps and services that help you find deals? Well, a new lawsuit alleges that you have Expedia to thank for that. A class action suit filed this month in the Western District of Washington claims that the travel middleman has gobbled up a monopoly-like share of the hotel booking market and is using its power to artificially jack up prices.
The suit invokes the Sherman Act and Clayton Act, two major pieces of antitrust law, and claims that Expedia has engaged in what amounts to an economy-wide price-fixing scheme that is costing consumers. Per the lawsuit, the problem stems from Expedia’s iron grip on hotel bookings, which it uses to charge a 15% commission to hotels that land a booking through the company’s platforms. That commission, it argues, has led to hotels charging travelers up to 30% more on their booking in order to recoup the profit lost from Expedia’s skim.
Whether that argument holds in court or not, Expedia certainly has managed to lock up a surprisingly large share of the online travel agency game. Under the umbrella of Expedia Group sit some of the largest names in online travel, including Hotels.com, Vrbo, Travelocity, Hotwire, Orbitz, and Trivago. According to the lawsuit, 80% of all US-based bookings that happen via an online travel agency happen on an Expedia-owned platform.
Given that, you might conclude—and the lawsuit alleges—that those companies aren’t really competing with one another because all of their money ultimately ends up as part of the same bottom line on the same quarterly earnings report.
And, while you might think that 20% of the market is a big enough share to put up a fight, the suit argues that Expedia has taken steps to stifle the little competition that remains. It allegedly prohibited hotels from offering better rates than you’d find on Expedia platforms on their own sites or through other, non-Expedia platforms, demoting them in search results if they didn’t comply. Additionally, the company is accused of pressuring hotels to ensure the rates they offer through Expedia are lower than they are on rival sites.
That puts the hotels in a tough spot, forced to pay a commission if they land a booking through Expedia while also getting squeezed to make sure that is the lowest price they can charge. The result of that pressure, per the lawsuit, is that consumers are just getting hit with price inflation across the board, all to satisfy Expedia’s greed.
Gizmodo reached out to Expedia for comment on the allegations in the lawsuit but did not hear back at the time of publication.
