FOX47 NEWS - City Taking Online Travel Companies To Court

Jeff Angileri
Feb 24, 2008, 7:25 PM

When planning for a vacation, websites like Orbitz.com are loaded with deals.

And a lot of those packages offer hotel rooms at discounted prices- but the city of Madison says those deals are hurting the city.

They're charging a certain amount on the room, and they're not charging the tax, says city attorney Michael May.

May is referring to the bed tax.

That money pays for several city projects such as operating the Monona Terrace.

Here's how it works

If a visitor pays $100 a night to stay at the Hilton downtown, about $10 goes to the city.

When a travel site offers that same room for $90 a night- the site collects around a $10 service charge- but the city doesn't get any of that money.

Our contention is when someone pays $90 for the room, they should pay room tax on that $90, May says.
So Madison is trying to get that money back.

It's filed a lawsuit against five sites-Hotels.com, Travelocity, Orbitz, Expedia.com and Priceline.

Other cities have tried suing the same companies and failed.

But May believes the city of Madison has a chance.

Our laws here say its the actually owner of the hotel or any other person furnishing the room and we believe they fall under 'any person furnishing the room, May says.

May estimates the city loses $50,000 dollars a year from these Internet travel sites and expects they will lose even more.

And if he loses his case. The city may have to turn to tax payers to make up for the loss.

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