Columbus wins case against another travel website - WTVM.com-Columbus, GA News Weather & Sports

Columbus wins case against another travel website

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COLUMBUS, GA (WTVM) -   For the second time, the Supreme Court of Georgia has ruled in favor of the city of Columbus in a lawsuit against an on-line travel agency.

The court upheld a Muscogee County court ruling that the local government has the right to impose taxes on the total amount Hotels.com charges customers to book hotel rooms in Columbus.

In a similar case in June, the high court ruled that Expedia, another on-line travel company, would have to pay the city taxes based on the mark up room rate it charges customers, rather than the lower wholesale rate it pays to hotels.

Like Expedia and other on-line travel companies, Hotels.com negotiates with hotels to obtain rooms at a wholesale rate. It then offers the rooms on its website at a marked-up "room rate," which also includes an amount for hotel fees and taxes.

The on-line company collects the taxes from its customers based on the higher room rate. But after the customer's stay, it remits to the hotel payment that covers the wholesale rate of the room plus an amount for taxes based on the wholesale rate rather than the room rate.

The hotel then pays the taxes to the municipal tax authority.

In 2006, Columbus sued Hotels.com, claiming that under a local ordinance, Hotels.com owed the city 7% in occupancy taxes based on the room rate, which is the "charge to the public," rather than the negotiated wholesale rate.

In a ruling siding with the city, the trial court issued a permanent injunction against Hotels.com and ordered it to collect and remit taxes based on the room rate.

Meanwhile, both Hotels.com and Expedia have not listed any of Columbus' hotels on their website. 

The case will return to Muscogee County in order for the trial courts to handle the alleged loss of tax revenue.

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