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Wednesday, April 7, 2010 as of 11:14 AM ET

Business

David Lewkowict

Atlanta, GA

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Check-in to Higher Hotel Costs

July 30, 2009 - 10:46 PM | by: David Lewkowict

A recent Georgia Supreme Court ruling may mean paying more when booking hotel rooms online. A battle between the travel company, Expedia.com and the city of Columbus, Ga. culminated on June 15th, when the courts ruled in favor of Columbus, giving them the right to collect more taxes from the popular travel site.

Expedia.com and other online travel companies buy discounted hotel rooms in bulk, mark them up, and resell them to travelers.  Once sold, taxes were being paid by the web based travel companies on the wholesale rate.  Under the recent ruling, Expedia.com must now render taxes based on the retail rate which they charge customers. I

In 2008 Expedia.com removed the ability to search for hotels in Columbus as a result of the tax dispute.  In a statement to FOX News the company indicated the court’s decision, “has no impact because Expedia ceased doing business in the City of Columbus in 2008.”

Columbus city administrator, Isaiah Hugley, says “We hope that Expedia will do the right thing and re-list Columbus and lets move forward and do business together.”

Some residents worry being “de-listed” will affect the city’s ability to attract tourists, but hoteliers in the area say that they have not seen any affect on hotel reservations. Ted Cobbs, manager of the Hilton Garden Inn of Columbus, insists, “Folks are still going to come here.  They are just going to find other avenues to book their travel to our town.”

According to Bill Carroll,a lecturer at Cornell University’s School of Hotel Administration, independent travel websites are responsible for a surprisingly small number of all reservations made. Destination specific and hotel branded websites still account for the bulk of rooms booked.

Dozens of cities, including Los Angeles and Chicago, anxiously await decisions on their own disputes with online travel companies. A ruling in their favor will put more money in their pockets during this time when many face budget deficits. Carroll and other travel experts believe that, while the ruling in Columbus is significant, court decisions made across the country will be based on individual tax codes.

By David Lewkowict & Lauren Bishop

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