Someone, whom I shall call "Industry Pundit" to protect the innocent, exchanged some e-mails with me after I let him know that Expedia began remitting taxes on the retail rate for merchant-hotel bookings in Columbus, Ga., to comply with a court order. And, of course, news of that development leaked out after the Georgia Supreme Court gave Expedia a bashing.
Industry Pundit: But didn't Expedia just move to retail (GDS) rates in Columbus rather than pay taxes on the full consumer rate that was still sold on a merchant basis? I'm not at/near a computer so I can't really tell.
Dennis: Expedia stopped its merchant-hotel business in Columbus before a court order in mid-September ordered them to pay taxes on the retail rate. But they had bookings in the pipeline [meaning guests would complete their stays after the court order took effect] so Expedia paid taxes on the retail rate for these to comply with the court order.
Not much money is involved, but I think this is the first time that money has changed hands and taxes paid on the retail rate.
Industry Pundit: Interesting. It could get ugly.
Dennis: How could it get uglier? I can see the OTAs withdrawing from Georgia. Period.
Industry Pundit: Texas is next in line. California after that. New York, too. Lots of people [meaning cities and states] with their hands out.
Dennis: Ugly:) And, so much for the OTAs having the momentum (not).
Industry Pundit: But we'll see. I do think they need a new strategy. Juries will see them as just another corporate bad-guy stiffing people like AIG. Not good for lawsuits or sales.
Alas, that was the dialogue. The speculation about the OTAs' next moves on the hotel-tax front continues.
Another insider, who's really inside the loop, told me: "Getting lots of feedback/theories as to why Expedia paid."
Meanwhile, Robert K. Cole , who is not the Industry Pundit or other industry insider cited above but has some ideas of his own on the subject, believes more OTAs will swap merchant for retails sales as margins get compressed and settlement and legal costs rise.
Indeed, the genie is out of the bottle.