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The Georgia Supreme Court recently ruled that Expedia is liable for the hotel tax on the room rate that it charges the consumer, not on the rate that it pays the hotel for the room.
Expedia, like all wholesalers, negotiates lower room rates directly with the individual hotels, marks up that rate when it sells rooms to the public,
The Georgia law, while not defining Expedia as a hotel, motel or innkeeper, is an "entity" that collects taxes and is therefore required to remit taxes to the city (of Columbus, GA, where this suit was based).
Expedia admitted that it had paid the increased taxes on the marked-up rooms in the last few months, in cooperation with a previously issued injunction.
Tourism authorities have decried the court's actions, saying that municipalities that insisted on collecting the additional taxes were shooting themselves in the foot since agencies such as Expedia might no longer choose to represent that area's lodging interests. Indeed, Expedia, Travelocity and Orbitz no longer list Columbus, GA hotels on their websites.
As I mentioned previously, the state of Hawaii has tried a similar tactic in the past. While they didn't get away with it then, fiscal pressures now may make Hawaii's legislators tempted to try it again. We know Hawaii is not the most business-friendly state in the Union; time will tell if our legislature attempts another assassination attempt on the golden goose of tourism.
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