The Las Vegas Review-Journal reported that several hotel-casino operators on the Las Vegas Strip have filed a motion to dismiss a lawsuit that accuses them of price-fixing hotel room rates through a revenue management platform, Rainmaker.
Tourists Sue Las Vegas Hotels for Alleged Antitrust Violations
In January, two tourists filed a lawsuit that accused hotel operators of violating the Sherman Antitrust Act and demanded that the defendants repay guests who overpaid. The lawsuit also alleged that Rainmaker unlawfully maximizes profits for its hotel operator users by designing rate recommendations through real-time pricing and supplying information from competitors on the platform.
The hotels have dismissed these allegations, stating that there is no direct or circumstantial evidence that backs their allegations of conspiracy. The initial complaint did not identify who entered the conspiracy nor when it began. The hotels claimed that the complaint fails to articulate what the defendants agreed to and how the alleged conspiracy operates and instead speaks generally to algorithmic pricing.
The plaintiffs’ law firm, Hagens Berman, released a statement that the motion to dismiss was expected, and they looked forward to continuing the case on behalf of the sizable class of those harmed by illegal pricing measures. Rainmaker, which is used by 90% of the hotels on the Strip, is accused in the lawsuit of violating the Sherman Antitrust Act.
The plaintiffs claim that Rainmaker’s proprietary software, Guestrev, analyzes real-time pricing and room supply information, then artificially suppresses supply, maximizing resort profits. According to the lawsuit, this artificially inflates hotel room prices, displacing normal competitive pricing and leading to increased room prices.
UNLV Professor Refutes Allegations of Las Vegas Price Fixing
In January, FOX5 reported that the plaintiffs claimed that if someone has rented a hotel room on the Strip on or after January 25, 2019, they may have overpaid due to this alleged illegal price-fixing scheme.
However, according to Amanda Belarmino, an assistant professor at the William F. Harrah College of Hospitality at UNLV, the current record high room revenue in Las Vegas is not because of price fixing. Belarmino stated that the biggest factor contributing to the high demand was the lifting of pandemic restrictions.
In the lawsuit, the plaintiffs accused MGM Resorts, Caesars Entertainment, Treasure Island, and Wynn Resorts of using the Rainmaker software to unlawfully increase hotel room prices by collecting real-time pricing and supply information from competitors. However, Belarmino disagrees and argues that the sharing of pricing and capacity information through Rainmaker is not collusion, but rather competitive research. She believes that unless proprietary information was shared, the plaintiffs will have a hard time winning their case.