The appellate court determined that the OTAs were not hotels under Mississippi law, even though they facilitate room bookings and collect funds considered occupancy taxes. In this article, I examine the issues and findings in this case.
In August 2020, the Mississippi Chancery Court issued a judgment of $44.899 million against a group of online travel agents (OTAs), sometimes referred to as online travel companies (OTCs). The defendants in this court proceeding comprised sites operated by Priceline, Cendant, Expedia, and Sabre.
The judgment was based on the court’s finding that the OTAs had failed to relay funds to the state collected from guests as part of the state’s sales tax and a local lodging tax. The basis of the Chancery Court’s ruling was the finding that, given the OTAs’ business model, they are effectively hotels.
On appeal, in July 2021 the Mississippi Supreme Court set aside the judgment. This subsequent ruling was based on the appellate court’s determination that the OTAs were not hotels under Mississippi law, even though they facilitate room bookings and collect funds that are considered occupancy taxes. In this article, I examine the issues and findings in this case.
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Chekitan S. Dev, the Singapore Tourism Distinguished Professor at Cornell University’s Nolan School of Hotel Administration, is an internationally renowned scholar and thought leader on marketing and branding in the hospitality, travel, and tourism industries. As an expert witness, he has testified in deposition, trial, and at arbitration in numerous hospitality-related matters, in the United States and internationally, including multiple cases involving hotel owner–brand relationships and the online travel industry.
