Price-fixing by Las Vegas Strip hotels alleged in lawsuit
A newly-filed class action complaint claims that hotel owners on the Strip conspired to artificially raise hotel room rates above normal market rates. This action was widely praised by many Las Vegas locals, whether they be advantage players or not, because of the seemingly never-ending price increases and constant reduction of patron “comps” extended by the hotel-casino operators.
Most Strip hotels use a revenue management platform, according to attorneys with the Seattle-based law firm Hagens Berman, which designs rate recommendations that “unlawfully maximize profits for its hotel operator users.” Operators set their own hotel rates in a cutthroat industry. However, the lawsuit filed in the U.S. District Court claims that information provided and algorithms developed through the platform Rainmaker replaced standard competitive pricing and resulted in higher lodging charges.
According to attorneys, the platform's algorithm was designed to increase hotel operators' revenues without increasing occupancy or decreasing supply. In a news release, Steve Berman, managing partner of Hagens Berman wrote, “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.”
With the operators identified controlling nearly 20 properties, the complaint lists Caesars Entertainment, MGM Resorts International, Treasure Island, and Wynn Resorts Holdings as defendants and highlights the businesses' strong market dominance of hotels on the Strip. Additionally included are Rainmaker Group Unlimited, a Georgia-based subsidiary of Cendyn Group, a Boca Raton, Florida-based provider of software and data analytics for the hotel industry.
According to the news release, the lawsuit alleges that hotel operators broke the Sherman Antitrust Act by employing the Rainmaker program and seeks to hold the defendants accountable for paying back overcharged customers. More litigants are being sought by lawyers.
The Nevada Resort Association and MGM Resorts declined to comment. Requests for comment from Caesars, Treasure Island, Wynn Resorts, and Cendyn Group were not immediately fulfilled.
Record-breaking hotel rates
In 2022, the Strip resorts' average daily room rate reached all-time highs. When the National Football League held its draft on the Strip in April, the Las Vegas Convention and Visitors Authority announced the highest room prices ever at the time. In that month, the average price was $173, with Strip hotel prices averaging $187 per night.
In September, prices of $187 and $199 on the Strip broke that record. The next month, during a very active convention month, the average rate was reported at $209, $225 on the Strip, marking the first time the average cost went over $200 per night.
Since the coronavirus outbreak, numerous Strip resorts have made an effort to maintain high hotel rates in order to prevent the appearance of quality declines. Generally speaking, they follow the laws of supply and demand, increasing costs during important events like the NFL draft, Electric Daisy Carnival, National Finals Rodeo, and CES.
High rates are also crucial to the organizations run by the government that are in charge of collecting the hotel room tax, which helped build Allegiant Stadium and part of the Las Vegas Convention Center.
“Las Vegas Strip hotels colluded, inflated room rates, lawsuit claims” , McKenna Ross and Richard N. Velotta, lvrj.com, January 25, 2023.