Hotel Taxes: Travelocity Makes the Thickened Plot Even Thicker

Not talking baseball here, but Travelocity has executed a Baltimore chop.

As I reported in Travel Weekly today, Travelocity.com earlier this year ceased selling merchant inventory from 14,000-room Baltimore, Md., because the city enacted a law to tax online travel agencies' service fees in 2007 and sued the major OTAs late last year.

This follows the news that Expedia, Travelocity, Orbitz and Priceline nixed merchant offerings from Columbus, Ga., after a judge in November ordered Expedia to begin paying hotel taxes.

Travelocity's decision to go solo on Baltimore, with Expedia, Priceline and Orbitz so far not following its lead, produces an interesting competitive scenario.

You can find Expedia.com offering rooms at the Baltimore Hilton on a merchant basis, but at Travelocity there is no pre-paid option for the Baltimore Hilton.

So, Expedia earns its hefty fees for the property and Travelocity merely collects a commission.

Perhaps some of the other OTAs soon will adopt Travelocity's stance on Baltimore, too.

At any rate, as I noted yesterday in a post, the major OTAs increasingly will choose which hotel markets to embrace and which to drop if tax decisions hit the OTAs adversely.

With the Baltimore and Columbus, Ga., chops, the OTAs are playing hardball.

I wonder if they soon will turn their attention to Annaheim, Calif., where a hearing officer tagged them for $21 million in back taxes. The case is being appealed.

What they are saying, in essence is: If you seek to tax us on the merchant model, which is the heart of our businesses, let's see who will suffer the most.

Will it be municipal tax coffers and local hotels if we don't market your properties, or will it be the OTAs?

That is the taxing question.