City wins tax battle against online hotel bookers: Your cost to go up soon


The price you pay for a hotel room using a Web-based travel booker like Orbitz, Expedia, or Priceline is one step closer to going up soon.

Now that times are lean and municipalities need tax money badly, a growing number of cities are jumping on a lawsuit bandwagon to wrest more taxes out of those online travel agencies. Basically, they want to collect taxes on the price customers pay for the hotel rooms, and not the insanely low wholesale price the travel agencies are paying.

In Anaheim, Calif, the home of Disneyland, a hearing officer just awarded the city $21.3 million in back taxes. If the decision holds in the courts, you can expect the cost of the hotel you book online to go up. And if judges in other cities agree with Anaheim, the Web sellers predict you'll be paying more nationwide.

Up to now, most of the tax battles have been in tourism areas that are almost laughably minor, like Muscogee County, Ga., (home of Columbus) and Pitt County, NC. If your hotel rates went up there, you'd barely notice. But this recent decision is the first time a major center for tourism, the almighty Disneyland, has scored a blow for tax collectors.