A recent judgement against Expedia creates a new front in the growing litigation battles facing the Online Travel Agency community.

Some OTAs have elected to suspend the sale of hotel rooms in jurisdictions such as Columbus, Georgia or Baltimore, Maryland where litigation is underway. It is questionable whether this approach could be sustained across a potentially growing number of tourist destinations, particularly with major cities in Texas, the State of Florida and the City of Anaheim now engaged in the process.

The bottom line is that OTA margins, already reduced due to competitive reductions in fees for airline flights and expanded low piece guarantee criteria for hotel bookings and packages, will be under further pressure from hotel merchant tax litigation. With the addition of consumer class actions to the existing mix of local tax jurisdiction suits, profit margins on stand-alone hotel bookings are under intense legal scrutiny and increasing legal expenses to support defense against a growing number of cases that are now advancing through the courts.

Ge the full story at the Gerson Lehrman Group