If true -- and I'm trying to confirm it -- the development is a shocker.
The two Expedia Inc. companies had filed a notice of appeal, meaning they intended to appeal a Los Angeles Superior Court ruling that held that they must first pay the tax to San Francisco in order to appeal the whopping assessment.
This could be just a tactical defeat for Expedia and Hotwire. Perhaps they are indeed merely paying the tax in order to vigorously appeal it.
But, it would represent an abandonment of the OTA strategy to drag out the litigation for as long as possible.
What most people don't realize is that Expedia Inc., among the online travel agencies, is the company with the most to lose. Its hotel business is so massive, that the other OTAs face a much smaller liability and threat.
For background on the case, read this story I wrote July 7.
Today's San Francisco Chronicle story said that Priceline and Travelocity, which were not part of the Expedia.com-Hotwire litigation but were involved in separate actions, were expected to pay more than $6 million, as well.
I'm reaching out to San Francisco's chief tax attorney to confirm the story. And, I have e-mailed the online travel agencies tonight to get their take on the development and to find out what actions they have taken or plan to execute.
This is a major development in the five-year old hotel tax fight, as thousands of municipalities, counties and states target the OTAs with assessments or litigation related to hotel taxes on the full retail rate.
If true, I wouldn't be surprised to see the OTAs pull out of the San Francisco market in terms of offering hotels on a merchant basis.
If they intend to appeal the assessment, as I suspect they will, then perhaps they will continue to market the city's rooms on a merchant basis while an appeal is under way.
Other municipalities could get the same treatment regarding OTA boycotts if the cities prevail in the courts.
For now, I see that Expedia.com and Hotwire still are offering San Francisco rooms using the merchant model.
The OTAs have more litigation and adverse development hitting them on the hotel tax issue than they can handle.
New York City recently adopted an ordinance that holds hotel "remarketers" as responsible for tax on the retail rate. With such explicit language, it may become moot whether the OTAs can convince New York courts of the OTAs' contention that because they are not hotel operators, they thus are not responsible for the tax on the retail rate.
And, Expedia Canada just got handed a consumer class-action complaint against it, charging that it misleads consumers by bundling its "taxes and fees" instead of breaking them out in a transparent manner.
We'll have to see what the San Francisco development means in terms of the countrywide (and now Canada, too) legal battle.
Is it merely a significant defeat for the OTAs in one city -- or the dawn of a new era in terms of the ways they market hotels online?
Will the OTAs abandon the merchant model for hotels in favor of an agency model only?
Any abandonment of the merchant model would have a whopping impact on the OTAs, with Expedia feeling the most heat.
On the other hand, we saw when they abandoned booking fees on flights, that the OTAs can come up with flexible ways to try to recover.
Stay tuned here on what the San Francisco development really means.
I'm awaiting further details on this breaking news story.