Miami Hotel Room Price Fixing Investigation

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Until recently, setting hotel prices was as much art as science. Hotel revenue managers tried to keep rooms full while leaving space for profitability. This also left room for savvy travelers to find deals at luxury hotels that were priced to move. That’s all changed.


Third-party companies (often backed by private equity firms not affiliated with any specific hotel) have developed so-called “pricing software” to license to hotels. With apt names like “Rainmaker,” this software replaces the human element of a hotel revenue manager’s job and replaces it with an algorithmic formula that determines the revenue-maximizing price to charge guests. This may sound like a good thing, in theory. The problem? The algorithm uses hotel prices in the surrounding area to calculate that revenue-maximizing rate

Hotel guests filed two recent lawsuits alleging that the use of such algorithmic pricing software violates the antitrust laws. One of those cases is in Las Vegas, and the other is in Atlantic City. In both cases, the guests allege that the casino-hotels adopted the Rainmaker software in quick succession, leading to increased prices for hotel guests. And because the casino-hotels used the same pricing algorithm (which calculates revenue-maximizing prices based on the rates charged by supposed competitors in the area), the plaintiffs allege that the casino-hotels engaged in illegal price-fixing.


It appears that many luxury hotels on Miami Beach may have adopted similar software to set room rates. If you stayed at a luxury hotel on Miami Beach within the last 3 years you may have been impacted.


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