Municipalities across the country have been suing the online travel agencies, charging them with cheating the local governments out of lodging taxes. Agencies responded by keeping hotels in those cities out of searches. Until now, it’s been primarily smaller cities like Columbus, Georgia. But last week, the state of Florida got in the game, suing Expedia and Orbitz, claiming that the agencies failed to pay the full amount of taxes owed.

The state’s argument rests on the distribution model of the big agencies. When you book a $150 room with a hotel directly, the rate you reserve is the top-line number the hotel receives. Taxes are calculated on the basis of that $150 price, and submitted to governments accordingly. When you book with an Orbitz, Expedia, Travelocity, Priceline, or Hotwire, you may be paying one price, but the agency is paying another. So you may pay $150, but a Travelocity may be paying $100 to the hotel and keeping $50 in profit. For such reservations, the hotel submits taxes based on the $100 wholesale price. State and local governments argue that they should be receiving the taxes based on the retail rate, not the wholesale. So a thousand lawsuits bloom.

When I visited Orbitz headquarters in Chicago at the end of September, I asked Brian Hoyt, the company’s Vice President of Corporate Communications & Government Affairs, about this legal trend. Hoyt replied that the premise of these suits was fundamentally wrong: The lawsuits presumed that the agency was the hotelier, when in fact they were just the middleman, adding a convenience charge to the booking that they negotiated for their customers. “Orbitz is no more a hotelier than Ticketmaster is a baseball team.”

But the state of Florida has just upgraded Orbitz to the big leagues.

I’ve been sympathetic to the agencies on this front since I first posted about it in May. But the agencies aren’t doing themselves any favors: The problem for Orbitz and their peers is exacerbated by the fact that the agencies don’t break out their prices in a transparent manner. The $150 rate in the example above doesn’t show up as $100 plus $50 in fees. It shows up as $150.

Further, the agencies tack on extra “taxes & fees” (reduced recently, admittedly, but still there) without explaining the breakdown. Since the margins on hotel bookings are fat, and the taxes are based on the lower wholesale rate, there’s some room for profit in those fees, too. (It’s much like the “handling” in “shipping and handling” charges.)

The Florida case is a huge deal for the agencies, and the consumers who book there. Just the Orlando and Miami bookings alone would hurt the companies’ bottom line.

Let’s assume for the moment that the agencies lose this battle, regardless of the merits of the argument. One strategy would be to lobby for a federal solution, in which a national legal standard for tax collection is determined and applied federally. Another strategy would be to reform the ways in which agencies quote hotel rates.

Look at the these two current examples of hotel rate and tax quotation:

Expedia:

Orbitz:

Same hotel, same dates. First off, note the slight variation between the agencies. The difference may be due to variation in negotiated rates, or in fees. But you won’t ever know, because the agencies aren’t telling you what you’re actually buying.

I can understand the why the agencies want to keep their real rates quient. But since the prices aren’t broken out, it’s possible for states like Florida to launch lawsuits. If the agencies can’t get a federal solution, they may need to start quoting the wholesale rates plus the fees.

And if these lawsuits lead to greater price transparency, that’s going to be a huge change.

Ric Garrido of Loyalty Traveler, the blog devoted to maxing out hotel points and value for the frequent guest, picks up on my post last week on Travelocity’s prepaid hotel rate guarantee.

Ric argues that hotel companies’ own best-rate-guarantee programs are superior to the new Travelocity program, for three reasons: 1) Travelocity caps the number of claims to 5 per customer per month. Hotel chains typically don’t place such a limit. 2) Group rates, such as AAA rates, aren’t covered by the Travelocity guarantee. 3) The loyalty benefits of booking through the hotels’ own sites exceeds the value of the potential rebate via Travelocity.

Ric’s argument may make sense for the high-frequency traveler with high frequent-guest program status — and established loyalty to a given brand, as his blog name implies. But the Achilles heel of the hotel chains’ programs remains their timeframe for making a claim. If you only have hours after purchase to find a lower rate, that’s not a really meaningful guarantee. To Travelocity’s credit (and, to a lesser extent, Orbitz’s credit) the agency’s rebate lasts days, weeks, or even months. And the five-claim limit per month won’t be a problem for all but the most high-volume travelers.

The Travelocity guarantee is far from perfect, as I’ve argued. But it’s not worth dismissing wholesale in favor of the hotels’ own programs.

Travelocity is upping the ante in the ongoing wars between the major online travel agencies. The agency is offering refunds if a hotel rate drops between the time you book a room and the time you stay at the hotel.

Here’s their pitch:

While competing sites offer price protection on hotel bookings only when lower prices are found on their respective sites, or only within the supplier`s cancellation window, Travelocity customers who find the same hotel booking for less elsewhere online (excluding hotels booked using a name-your-own-price service) any time prior to the day of check-in, can notify Travelocity and receive a refund for the difference in price. Additionally, as a special offer to introduce the hotel price match guarantee, between now and Dec. 31, 2009, customers will also receive a $50 discount toward future travel.

The new guarantee is aimed at two competitors: the hotels’ own lowest-price guarantees, and Orbitz.

Hotel websites typically offer a 24-hour window for filing a claim if you can find a lower rate. (See Hyatt’s terms, for example.) That’s not that impressive.

Orbitz offers an automatic refund (”Price Assurance”) if another customer on Orbitz books the same room for the same dates at a lower rate. Those are some slim odds. Yes, it’s automatic, but again, the odds are against your ever seeing a penny.

Travelocity’s guarantee is stronger than both of these offerings, insofar as the rate simply has to drop, and in a huge window of opportunity. But since you have to do the legwork and call Travelocity in order to get the refund, they are effectively betting that you won’t be tracking rates on a regular basis.

To be clear, this is only relevant (and possible) for prepaid reservations anyway. A cancelable reservation can always be replaced with a new reservation at a lower rate, after all, should the price drop. Travelocity calls their prepaid rooms “Good Buys” so look for that label to be covered by the new guarantee.

So, how DO you track rates once you’ve booked? Bring in Yapta.

Yapta allows you to receive updates when rates drop for specific hotels’ rooms (they do it for airfare, as well). So if you book a hotel room on Travelocity, you should immediately run a search for that specific hotel on Yapta, then select “track price drops.” If the price goes down, you get an e-mail. Then, contact Travelocity. Collect refund.

I don’t believe Travelocity was counting on customers using automated assistance when they launched this. But they’re about to find out if this is a feature they can actually sustain.

Related:
- Orbitz Price Assurance re-examined: Real savings or gimmick?
- Check in the mail: Orbitz refunds airfare price drops, but is it worthwhile?
- Less Choice: Expedia excluding hotels from searches
- Track airfare before and AFTER you buy?

Downgraded: TSA
Upgraded: Airports with independence
Near Glacier National Park, in Kalispell, Montana, Glacier Park International Airport is hoping to boot the TSA off its property and replace the government security agency with private contractors. What?? I had no idea this was possible, but sure enough: Under the Screening Partnership Program, an airport can apply to reprivatize security, generally if TSA isn’t meeting the airport’s needs. The issue for Glacier was staffing: The TSA calculated staffing levels based on October traffic levels — when August is the peak travel time for the area. About 15 airports, including several in Montana, have opted out of the TSA’s domain.

Upgraded: Efforts to keep convention business. ANY convention business
Hotels need business. So, is there any problem with hosting a convention of swingers as a Holiday Inn in upstate New York did? The annual spouse-swapping event, “Entice the Falls” (link not entirely safe for work), featured some exciting events like “Flogging 101″ and a (canceled) body painting party. But how many bonus points do you earn for a weekend of debauchery?

Downgraded: Chrysler at the rental counter
The Dollar Thrifty Automotive Group is slashing its purchases of Chrysler vehicles. Their fleet is currently 76% Chrysler, but Ford will nearly tie Chrysler for new purchases (34 and 30%, respectively).

Upgraded: Luxury in Mecca
Downgraded: Raffles Hotels’ management’s common sense
Islamic pilgrims to Mecca who aren’t feeling particularly pious, but who are looking to live large, may be pleased to hear that Singapore’s Raffles Hotels are planning an enormous luxury hotel that will cast a shadow on the Muslim world’s holiest site. But what on earth is the hotel chain thinking? I’m sure some will find the uber-luxurious hotel an affront to the religious meaning of the site; are they painting a giant target on all the hotels in the Raffles brand?

Upgraded: Recliners!
The dip in travel has been a boon for furniture makers. What? Yes, according to the industry, sales of reclining chairs are up, as Americans travel less, stay home more, and look for greater comfort in their living room.

Upgraded: Spotlights on mileage running
I’ve been known to go on a mileage run or two (though not for a few years now) in order to bump up my elite-qualifying miles to the next tier, but I’m nowhere near the big leagues that these guys play in. Check out this 20-minute documentary on mileage runners, and the OCD spirit that drives them to collect miles and points with a singleminded focus:

An article on the website of the trade journal Hotels sounds an alarm to hoteliers, and by extension, to consumers: Expedia and its sister site Hotels.com are blocking hotels under the Choice Hotels umbrella from searches on their sites.

The alleged reason? Here’s a quote from the piece, for the wonkish:

For some time now, we have been hearing from many industry sources that during renewal negotiations Expedia/Hotels.com has demanded new terms and conditions that are against everything the hospitality industry stands for: last room availability, guarantees that the best rates are only found on Expedia/Hotels.com sites, penalties to properties that do not use their sites 100% of the time, etc. These contract renewal “negotiations” have been described to us by some participants from various hotel companies as “here are our terms – take it or leave it”-type of meetings and “practically lack of any essence of a real negotiation,” etc.

In other words, these new terms and conditions demanded by Expedia will effectively take away hoteliers’ rights to manage inventory and rates at their own hotels, destroy channel management and rate parity, and will eventually lead to a long-term erosion of hotel brand and price integrity in the same manner it did after 9/11 in 2001.

Since Choice is apparently not playing along, they’re missing from search results on Expedia-owned sites. That means that customers looking for a hotel will have to look somewhere other than Expedia if they want a more complete picture of the lodging landscape. That’s nearly 5000 properties that are off of Expedia’s grid. And there may be others.

Granted, the Choice properties (Quality, Comfort, Econolodge, Clarion) aren’t ones that I long to be staying at. You may not miss them. But for the budget-minded or the roadside sleep-seeker, these brands are generally reliable, standard motel fare. And now, on Expedia, it’s as if the hotels didn’t exist.

Part of me doesn’t have a problem with this. The big online travel agencies aren’t search engines. They’re businesses, and they’re trying to make as much money as they can. They don’t claim to represent every hotel in the world, and it’s their prerogative to keep out a company that isn’t willing to ante up.

But for consumers, it makes apples-to-apples comparisons harder, and thus makes loyalty to a single agency hard to justify. It also makes metasearch more important. Using a search like Kayak, which once claimed to want to catalog every hotel on the planet, looks more attractive for first-cut hotel searches.

Expedia is risking losing customers’ trust. If the agency wants to hardball its suppliers, that’s its option. But consumers would be right to ask if Expedia is in their corner.

Upgraded: Bad ideas made real
Remember the proposal for sideways seating on commercial airlines? DesignQ, the company that proposed the scheme, is moving toward testing — including crash simulations — by the end of 2009. I am honestly surprised the design is being pursued this aggressively. We’ll see how those tests go. Here’s a reminder of what the designers have in mind:

Downgraded: Hilton hotels in Venezuela
Venezuelan president Hugo Chavez has nationalized another Hilton-managed property, this one on Margarita Island. It looks like the 154 timeshare owners are out of luck. And yet, the hotel is still in the Hilton system, and maintains the Hilton branding. Huh?!

Downgraded: Hotel reviews… for libel
TripAdvisor contributors, take note: If you’re writing a scathing review of a small Australian hotel or inn, you may find yourself the defendant in a libel suit. Companies with fewer than 10 employees are legally less restricted in suing for libel than larger firms, apparently. But the best defense for libel remains the truth.

Downgraded: USA Today
USA Today’s circulation took a 17% hit, and Gannett’s management placed the blame on a decline in travel. Those papers that show up in front of the hotel door sure do add up!

Downgraded: Pilots’ holsters
Remember the pilot who discharged his pistol in the cockpit and shot a hole through the fuselage, in-flight? He’s been permitted to fly again, 18 months after being fired by US Airways for the incident. In his defense, “the Department of Homeland Security faulted the design of holsters used by pilots who carry their weapons on board planes. The department’s inspector general said the design increased the chance of accidental discharge when pilots inserted their guns in the holsters.” But why a pilot needs a holstered sidearm — behind a locked cockpit door — in the first place isn’t clear to me. The pilot is no longer allowed to carry a weapon aboard.

Upgraded: Peep shows for UK airport security
The US isn’t the only country installing full-body through-the-clothes scanners at airports. The UK is doing so as well. Yes, the systems are designed to show hidden weapons. But “the full body scans will also show up breast enlargements, body piercings and a clear black-and-white outline of passengers’ genitals.” Black-and-white nude silhouettes are already visible to security personnel at Manchester Airport. Passengers have the right opt out of that screen and choose a more traditional scan instead.

Downgraded: Glib descriptions of getting upgrades
Upgraded: Smackdowns
Gary Leff and I got the same e-mail from the folks at TripBase, promoting a post on their blog describing how to “almost always” get upgrades. The post is yet another piece of upgrade disinformation, perpetuating mythologies that may have once held sway but no longer mean anything in today’s airline environment. Gary has a fantastic point-by-point takedown of the piece.

Downgraded: American credit cards
For several years now, a pet-peeve of mine as an American traveling abroad has been the challenge of using a swipe-and-sign credit card in a country where chip-and-PIN is the norm. (Consider previous posts on chip-and-PIN challenges. I even wrote a piece for National Geographic Traveler on the issue.) Now the New York Times revisits the issue and finds that it’s getting worse, not better, for American cardholders. When will US card issuers catch up with the rest of the world? (Thanks, David!)

Downgraded: US Customs and Immigration
Did the gruff face of US immigration kill the city of Chicago’s bid for the Olympics? It was apparently a contributing factor, if reports from the IOC are to be believed: “Syed Shahid Ali, an I.O.C. member from Pakistan, in the question-and-answer session following Chicago’s official presentation, pointed out that entering the United States can be ‘a rather harrowing experience.’” Somehow, it’s not a shock that the guy from Pakistan had this particular critique of entering the US. But he’s hardly alone.

Downgraded: Cockpit decorum
When I draft my list of minimum requirements for pilot competence, I think “not getting into fistfights in the cockpit” goes unspoken, an assumed background condition for commercial travel. Apparently, I need to be more explicit with my expectations. An inflight cockpit brawl on Air India, anyone?

Upgraded: Hotel promo deals
Over at View from the Wing, read up on an ongoing Hyatt promotion “the best hotel promo I’ve ever seen.” The deal: 13,500 United Airlines miles and a free Hyatt night for a two one-night stays at a Hyatt property, including discounted Hyatt Place properties.

Downgraded: Brazilian justice
Three years ago, NYT columnist Joe Sharkey was onboard a plane that survived a midair collision over Brazil. He subsequently criticized Brazil’s fractured air traffic control system and came under nationalistic fire for refusing to go along with the official Brazilian line that the (American) pilots of the surviving business jet were solely at fault for the accident. Now, Sharkey is being sued for $250,000 for defaming the entire population of Brazil. The lawsuit is offensive and absurd. For more background on the case, see here and here.

Downgraded: Helicopter service in Manhattan
Helicopter service from downtown Manhattan to JFK, canceled? I’m shocked, shocked!

Upgraded: Electronic cigarettes on airplanes
Back in February, I posted about a report of an impending deal between an electronic cigarette manufacturer and an unnamed airline. Immediately, I thought it would be a European low-cost carrier. Sure enough, it’s the granddaddy of ‘em all: Ryanair. For €6, you can buy a pack of 10 (disposable, I assume) nicotine-vapor sticks.

Upgraded: Clear’s life chances
Clear / Verified Identity Pass, the subscription-based service that promised shorter airport security lines, before it died an abrupt and refund-less death, may be back. I was a skeptic from the get-go — frequent travelers already get shorter lines, without having to give up their personal information. I’m still a skeptic.

Upgraded: Bloggers branching out
Brett Snyder of CrankyFlier is expanding the Cranky franchise: He’s launching a new service, dubbed CrankyConcierge. For $30, he’ll help you find a low fare, track your flight status for you, look for alternatives in case of rebooking, and aid you in post-trip dispute assistance. At the same time, Gary Leff of View from the Wing is now charging $150 to help travelers book frequent flier tickets. I’m looking forward to seeing these business ideas develop. Good luck, guys!

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It’s been a tough few weeks, but U:TB is back on the beat. Not tanned, rested, or particularly ready, alas. But back.

Upgraded: Snakes in a car
A Florida woman got in her Enterprise rental car, only to find a 3 1/2 foot long red rat snake on the dashboard. Will “snake availability waivers” be the next add-on fee? And was it a Dodge Viper?

Upgraded: Convictions of liquid bombers
Prosecutors in the UK convicted three men of conspiracy to murder, as part of the 2006 liquid-explosives threat. Prosecutors want to re-try three of the men, for whom the jury could not reach a verdict. In connection with the trial, the BBC released a video ostensibly showing a liquid bomb of the type planned by the convicts.

Upgraded: Newcastle airport
UK officials are testing liquid-explosives scanners at Newcastle airport, using a device that scans liquid containers to judge whether their contents are a potential bomb ingredient or a harmless beverage, facial cream, or toothpaste. Could the 3-ounce liquid limit be up for review?… stay tuned.

Upgraded: Singapore’s A380
Global travel is in a slump. But if you’re expecting an empty seat in coach on board a Singapore Airbus A380, guess again. People still pack the plane. Full planes don’t mean a fat bottom line, though. The airline isn’t getting top dollar per ticket, even if the public seems to like the plane.

Upgraded: Hotel deals
The average rate for hotel rooms has dropped 17% in the first half of 2009 alone, making the average room the cheapest its been in five years. Bucking the trend: rates in Caribbean, down only 2% on average. (I’m sure there’s still a lot of variation between islands.)

Downgraded: Block 37
For years, “block 37″ in the center of the Chicago Loop (the block is bounded by Randolph, State, Washington, and Dearborn) stood vacant. It’s a construction site now, with plans for a central transit hub underground. And above ground, a Loews Hotel was planned, with rights sold to the company for $1. But the hotel chain can’t (or won’t) get financing for this prime downtown location, so yet another hotel project is up in the air.

It’s another hotel offer that’s worth checking out: Westin is offering a free third night with a two-night stay. Their third night free offer is valid for stays through December 31, 2009, and the rules state that it’s available at all Westin properties worldwide.

Normally, I’m skeptical of these deals, because it’s often hard to find availability for the dates and locations you really want. But I just ran a few searches myself, and found good deals at properties in Berlin, Tucson, and Los Cabos. Then again, I had no luck finding rooms available through this offer at any property and date combination I searched for anywhere in California. Your mileage may vary, of course, but it’s definitely worth checking out.

Hat tip to Julia Bainbridge writing on Wendy Perrin’s page over at Conde Nast.

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It’s come to this: German package tourists booking through Thomas Cook can upgrade their vacations and add a reservation for a poolside lounge chair. “Beach towel wars,” whereby competitive tourists get up early to “claim” a chair with their beach towel, may be a thing of the past if this takes off.

Nine hotels have joined the scheme to stop “beach towel wars”, which see many Germans accused of hogging loungers.

Reserving a lounger and beach umbrella in advance will cost about three euros (£2.60) a day, on top of the holiday package.

Thomas Cook is offering the option at nine hotels in Turkey, Egypt and the Canary Islands.

For a weekly rate of 49 euros per room a family can reserve one lounger for each person, along with a beach umbrella and their own dining table at six Egyptian hotels.

The fact that people are currently getting up early to run downstairs, plop down a towel, only to sit in the same spot for hours and hours, broiling away in the sun, strikes me as sad.

But, from the perspective of the hotels and the booking agency, it’s a great way to boost revenue and improve those customers’ experience… if they book in advance. Otherwise, tourists might show up at a resort and find the pool completely reserved. And they’ll be dissatisfied, to say the least.

But if you’re a hotelier, how far do you take this? What else could be pre-reserve-able, to calm the nerves of guests who, for whatever reason, want nothing left to chance? The hour when housekeeping knocks? Buckets of ice from the machine? Treadmills in the gym?

So: What say you? Is permitting the reservation of a pool chair a good idea, or absurd overplanning? Hit the comments!

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