The Travel Technology Association (Travel Tech), representing the online travel industry and one of the groups on the front line of resisting state or local taxation of online travel agents (OTA's) issued a statement regarding yesterday’s judgment entered by U.S. District Judge Orlando Garcia:
“This was a decision rendered over three years ago, and since then other Texas courts who have considered this issue have found the OTCs not liable. This includes a Houston trial court and a Houston Court of Appeals. The Texas Supreme Court declined to review that case and let it stand," Travel Tech said.
“Given the previous rulings in Texas in our favor, we feel confident that the Federal Fifth Circuit will reverse Judge Garcia’s decision as it is inconsistent with Texas law as defined by the Texas appellate court. The Fifth Circuit is required to defer to the decisions of Texas state courts when it makes its decision."
By way of background Travel Tech notes a class of Texas cities sued the OTCs for allegedly not paying municipal hotel occupancy taxes on the fees they charge consumers. The ordinances at issue were written decades ago, before the internet existed.
Hotel occupancy taxes have never been charged on the fees charged by travel companies, online or offline, in Texas before, Travel Tech says. This case is about expanding taxes using the courts rather than the legislature.
Texas courts who have considered the case found the OTCs not liable. This includes a Houston trial court and a Houston Court of Appeals. The Texas Supreme Court declined to review that case and let it stand, Travel Tech says.
San Antonio is the class representative, and 172 Texas cities are in the class, according to Travel Tech. The defendants are 11 online travel companies. The jury returned a verdict on October 30, 2009, finding that the online travel companies "control" hotels. The judge reversed all other liability issues to himself. The court rendered judgment yesterday.
The final judgment held that the 11 defendants owe a total of $51 million dollars. The defendants plan to appeal this judgment to the U.S. Fifth Circuit Court of Appeals. The Fifth Circuit is required to defer to the decisions of Texas state courts when it makes its decision. Travel Tech said it expects it to take 12-18 months for the appeal to finish.
The Travel Technology Association, or Travel Tech, is the association for online travel companies (OTCs) and global distribution systems (GDSs). It seeks to connect consumers and travel providers, eliminating barriers to travel and protecting consumers. Members include: Amadeus, Expedia, Orbitz Worldwide, Priceline, Travelocity, Travelport and Vegas.com.
Visit www.TravelTechnologyAssociation.org