The Las Vegas Strip tried to increase the prices – and they won’t profit from that. On the contrary, the company will experience a significant loss.
On Wednesday, a class action lawsuit was filed against the famous hotel operators. Ignoring the competitive levels of hotel room prices, Las Vegas Strip tried to artificially inflate their prices.
The unauthorized use of the Rainmaker platform:
The attorneys from Hagens Berman said that the program that the Strip hotels use for revenue management was used to track the competitors’ pricing in real-time, as well as to collect the data from the competitors’ platforms. They had been using the information to maximize their profits.
The operators are pretty independent when it comes to determining the right prices – but in this case, the increase was enormous, which led to the filing of the suit in the U.S. District Court. The company shared the data and algorithms with the Rainmaker platform, whose algorithm was set to increase profits.
This violates the Sherman Antitrust Act, and the companies will be obliged to repay the guests who have paid the higher price.
Steve Berman, a managing partner at Hagens Berman, said: “Our antitrust attorneys have uncovered what appears to be an unlawful agreement in which Rainmaker collects and shares data between Vegas hotel competitors to unlawfully raise prices of hotel rooms. What happens in Vegas will no longer stay in Vegas. We intend to expose the under-the-table deals perpetrated by these Vegas hotels, and we intend to hold them accountable.”
Some of the companies included are Caesars Entertainment, MGM Resorts International, Treasure Island, and Wynn Resorts Holdings. All of them possess a significant market share of the Strip’s hotels, along with the other 20 resorts under their control. Other defendants are Cendyn Group, a Boca Raton, well-known hospitality data analytics and software company from Florida, and Georgia-based Rainmaker Group Unlimited, the company’s subsidiary.
The record-breaking rates:
During the last year, the average price for renting the room was at the highest level ever. As per the reports of the Las Vegas Convention and Visitors Authority, the highest prices were in October, when the rate was $209.89. At the moment, Strip was charging about $225.69 per night at their hotels.
COVID-19 definitely made an impact on the hotel industry, and Strip resorts aren’t an exception. The company decided to keep the rates higher than usual in order to maintain the quality of the services. Additionally, their overall philosophy was to increase the prices during some significant events, such as the NFL draft, Electric Daisy Carnival, National Finals Rodeo, and CES.
The state benefited from these high rates too. The taxes were high, and that budget helped in financing the construction of Allegiant Stadium and the West Hall of the Las Vegas Convention Center. However, the LVCVA commented on the hotel rates in the city several times, saying that they are a bargain when compared to other big cities.