Did the City of Columbus Slay a Giant in its Legal Battle with Online Travel Agencies?

Recent research by Turner College management professor Kirk Heriot and colleagues from the College of Charleston and Fresno State University examines the City of Columbus’ lawsuit (in 2006) over uncollected accommodation taxes against online travel agencies, such as Expedia and Orbitz.  As a result of the lawsuit, the companies delisted Columbus hotels from their websites, a situation that existed until the lawsuit was settled (after a few years).  As Heriot and his colleagues indicate in their 2018 publication in Cornell Hospitality Quarterly, the episode provided for a non-experimental “real life” exploration of the power balance between online travel agencies and municipalities. 

That exploration indicates that online travel agencies have less power than is generally assumed, as the City of Columbus emerged victorious in their claim to associated accommodation taxes, while local hoteliers experienced an increase in revenues.  According to the authors, an important takeaway from their research is that delisting is not the deterrent that conventional wisdom suggests.  That said, another takeaway concerns the expected cost of a lawsuit like that initiated by the City of Columbus.  As they advise, any taxing authority should assess the likelihood of a courtroom success before commencing legal action against an online travel agency.