The consumers successfully argued that the fees also included Expedia’s mark-up of net hotel rates. The judge ruled that they “correctly concluded that profits, not costs, are the subject matter of these service fees”.
Expedia’s terms and conditions no longer contain the disputed language. Instead, it states: “We retain our service fees as compensation in servicing your travel reservation.”
A spokeswoman for Expedia said: “We believe that the court’s decision is wrong on the law and wrong on the facts. Expedia.com charged its customers a service fee for certain transactions… fully disclosing those fees to each customer before a booking was completed.”
The ruling, although subject to appeal, is a blow to Expedia and its merchant hotel model, in which Expedia acquires wholesale rates from hotels and marks them up.