Las Vegas Strip hotel operators work together to artificially inflate room prices

LAS VEGAS, Nev. (FOX5) – A class action lawsuit filed Wednesday against many of the resorts on the Las Vegas Strip alleges four of the largest hotel operators are working together with a third party to artificially inflate hotel room prices.

According to the lawsuit, if you’ve rented a hotel room on the Las Vegas Strip on or after January 25, 2019, you may have overpaid. Two people who rented hotel rooms during that period are named as the plaintiffs in the class-action lawsuit accusing four of Vegas’ largest gaming and hospitality companies of engaging in an illegal price-fixing scheme to raise hotel room prices. While Las Vegas hotel room prices are currently at record highs, UNLV Assistant Professor at the William F. Harrah College of Hospitality Amanda Belarmino says it is not because of price fixing.

“There’s many things that contributed to the record high room revenue that we had last year but the biggest thing is demand… This was the first year since the pandemic we had the Raiders. This is the first time people without [pandemic] restrictions were able to come here,” Belarmino explained.

The class-action lawsuit names MGM Resorts, Caesars Entertainment, Treasure Island, and Wynn Resorts, collectively 20 of the 30 major Strip properties. Investigating attorneys from law firm Hagens Berman claim the hotel operators worked together to inflate prices using a revenue management software called Rainmaker. The lawsuit alleges that Rainmaker is used by an estimated 90% of Vegas Strip hotels and collects real-time pricing and supply information from competitors providing room rental rate recommendations designed to unlawfully maximize profits. Attorneys for the plaintiffs argue this algorithmic-driven price-fixing is in violation of antitrust laws but Belarmino says she doesn’t think that’s the case.

“I have been a revenue manager. I have used Rainmaker… As long hotels have been setting prices and had a telephone, they have looked at their competitors’ rates and the rates that they are looking at is publicly available data,” Belarmino shared.

Attorneys contend operators should price rooms independently, that sharing of pricing and capacity information through Rainmaker has displaced normal competitive pricing and lead to increased room prices but Belarmino believes unless proprietary information was shared, they will have a hard time winning their case.

“It is just like if you had a bookstore and went around to other bookstores to see what they are pricing something at. Is that collusion? No, that is competitive research, so I don’t really view this as collusion,” Belarmino stated.

FOX5 reached out to the hotel groups named in the lawsuit Wednesday night for a response but as of this report, we have not heard back.

If you think you overpaid for a hotel room and want to take part in the class-action lawsuit you can learn more here.

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