Sabre wins Award - Online Travel Companies sued for failure to pay taxes

Sabre Businesses Recognized with World Travel Awards; Sabre System Named ``World's Best Global Distribution System''

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artcile on lawsuit against online travel companies

The city (Los Angeles) sued the four online travel companies, alleging that Los Angeles is losing about $10 million a year in hotel taxes because of the way the sites price their trips.

Like traditional travel agents, the Web sites negotiate discount rates with hotels, then mark them up and sell them to consumers. The suit alleges that the companies charge and collect taxes based on the higher rate but pay the city's 14 percent hotel tax based on the lower rates, then pocket the difference.

At least one of the companies said publicly that the lawsuit is without merit, but it's not an issue that's likely to go away. Los Angeles, which estimates that the pricing practice is costing cities across California a total of $100 million annually, is seeking class action status for the suit.