Hotel Operators to Stop Anticompetitive ‘Call Around’ Practice That Could Raise Room Rates
Three Operators Agree to Pay $45,000 in Civil Penalties; Settlements to Protect Consumers from Artificially High Hotel Prices
BOSTON – Nine hotel operators in Massachusetts have agreed to cease a potentially anticompetitive practice through which a hotel receives competitive room rates and occupancy information that can be used to raise or stabilize its own prices, Attorney General Martha Coakley announced today. Three of the operators have agreed to pay a total of $45,000 in civil penalties to the Commonwealth.
“Hotel operators exchanging this sort of nonpublic information can lead to higher prices and a less competitive market,” AG Coakley said. “We are pleased that these defendants have agreed to stop this practice so that consumers are protected from paying artificially high room rates.”
The separate assurances of discontinuance with each of the hotel operators, filed today in Suffolk Superior Court, allege that the “call around” practice generally involved one hotel property contacting its competitors and asking for the competitors’ room rate and its nonpublic occupancy rate. In many, but not all instances, a call around also involved the hotel providing its own rate information to competitors.
The AG’s Office alleges that call around information was used in some cases to artificially raise or stabilize the prices for rooms when a hotel learned that its competitors had limited rooms available.
Under the terms of the assurances of discontinuance, the AG’s Office alleges each hotel operator engaged in different levels of conduct:
Morgans Hotel Group Management LLC:
- Employees allegedly called competing hotel properties regularly to obtain same-day rate and non-public occupancy information, and provided its own information to competitors.
- On certain occasions, when call around information indicated competitors had limited availability, Morgans allegedly raised the rates on its remaining rooms.
- In addition to agreeing to cease its call around practices in Massachusetts, Morgans will pay $25,000 in civil penalties to Massachusetts.
Pyramid Advisors, LP / Kimpton Hotel and Restaurant Group, LLC:
- Employees at Pyramid and Kimpton allegedly regularly called competing hotel properties to obtain same-day rate and non-public occupancy information and provided its own information to competitors.
- The information collected at Pyramid and Kimpton properties was allegedly regularly provided to employees that had price-setting authority or input in the setting of prices.
- In addition to agreeing to cease call around practices in Massachusetts, Pyramid and Kimpton will each pay $10,000 in civil penalties to Massachusetts.
HHLP Bulfinch Associates, LLC / Marriott International, Inc. / Omni Hotels Management Corporation / Pacific Boston Holdings Corp. / Seaport Hotel Limited Partnership / Starwood Hotels & Resorts Worldwide, Inc.:
- Employees allegedly provided same-day, non-public occupancy information to competing properties that requested that information.
- The AG’s Office did not find evidence that any of these hotel operators collected current information from their competitors through a daily call around practice.
- Each of these hotel operators agrees to cease participation in call arounds in Massachusetts.
This matter was handled by Assistant Attorney General Michael MacKenzie, Paralegal/Economic Analyst Dan Van Lunen, and Division Chief William Matlack, all of Attorney General Coakley’s Antitrust Division, and Director Kevin McCarthy of the Attorney General’s Civil Investigations Division.