California Court Overturns San Diego Hotel Tax Ruling Against Online Travel Companies

Joins Large Majority of Decisions in California and Around the Country Favorable to OTCs

Sep 08, 2011, 17:10 ET from Interactive Travel Services Association

WASHINGTON, Sept. 8, 2011 /PRNewswire/ -- This week, a California state court rejected the City of San Diego's attempts to impose hotel occupancy taxes on online travel companies (OTCs).  Ruling that OTCs are neither owners nor operators of hotels, the Los Angeles Superior Court held that San Diego's occupancy tax ordinance did not apply to the booking services offered by the OTCs.  In doing so, the Court overturned a decision by a San Diego administrative hearing officer assessing more than $21 million in taxes and penalties against the OTCs, and joined a large majority of courts nationwide that have ruled against municipalities and states in similar hotel tax cases decided on the merits.

This is now the third California court decision ordering judgment in favor of the OTCs.  No court in California has ruled against the OTCs, and California courts have now overturned two separate administrative decisions holding the OTCs liable for the hotel tax."

The OTCs have now prevailed completely in 15 of the 19 cases nationwide where courts have ordered judgment, and appellate courts have affirmed four of those favorable judgments.  In two of the remaining cases, the courts ruled that the OTCs owe no back taxes.  "Online travel sales provide global marketing opportunities for local tourism," said Interactive Travel Services Association Executive Director Art Sackler.  "Municipalities and OTCs should work together to promote travel and tourism for everyone's benefit, rather than both sides' expending precious resources on futile litigation."

ITSA is the trade association for online travel companies and global distribution systems, and is the industry's voice on matter of public policy.  ITSA promotes consumer choice, access, confidence, protection and information in the world of online travel.  ITSA seeks to develop consensus among industry, consumer organizations and policy makers on issues related to consumer use of the Internet to meet their needs.

SOURCE Interactive Travel Services Association