Online travel agents, tour operators and traditional agents may have to change the way they market hotel accommodation in New York City, after the New York County Supreme Court threw out a lawsuit that several groups representing them brought against the City. The lawsuit essentially challenged the constitutionality of Local Law 43, which states that OTAs and other agents are
responsible for the hotel occupancy tax, including service fees. It also calls for ‘room remarketers’ – as they are categorized in the law – to provide a detailed breakdown of taxes and fees.
In general, online travel agents avoid breaking down costs as it removes their competitive edge. They have avoided doing this in several states that have similar laws, arguing that they are not hotel operators and therefore should only have to remit tax on the net rate they receive from the hotels they represent. However, the New York Supreme Court was not convinced and threw out the lawsuit brought by Priceline, Travelocity, the American Society of Travel Agents and the United States Tour Operators Association, among others.
The Interactive Travel Services Association commented on the ruling and said that it would need to consider “what steps to take, if an”.
A counsel for the NYC Law Department, Joshua Wolf said: “We are pleased that the Court confirmed the constitutionality of Local Law 43, and accordingly, the City’s right to impose the hotel room occupancy rate on the full amount charged for a hotel room.”
Travel agencies, OTAs and operators will now need to negotiate with New York City in a bid to reach middle ground, since the option of pulling out of the New York market – with its incredible range of products and increasing number of tourists – is unthinkable.