Booking sued by Texas, which alleges deceptive hotel-rate practices

Many travelers have known the kind of deep frustration that comes with trying to score a good online rate for a flight or a stay in a hotel. 

You see what appears to be a great price in one window but, when you go to book, find that the rate has changed to include anything from extra resort fees to booking charges. In other cases, the rate one saw disappears entirely.

Don't Miss: Marriott drops a hotel pricing practice people hate

What is known in the industry as "deceptive hotel practices" has, in recent years, been subject to more efforts at a crackdown. Last October, President Joseph Biden called on hotels and booking sites to "reduce or eliminate hidden fees, charges, and add-ons" and committed to cracking down on those who didn't. Marriott  (MAR) - Get Free Report became the first major chain to enforce this and display all add-on rates upfront starting from May 2023. 

Lawsuit accuses Booking of luring 'unwitting consumers with artificially low room prices'

The latest company to come under the microscope is the platform behind many popular travel booking sites, Booking Holdings  (BKNG) - Get Free Report. In a lawsuit filed in a San Antonio court on Aug. 10, the Office of the Attorney General of Texas accused the travel company of deceptive hotel rate practices by "omitting mandatory fees from the advertised room rate."

"For years, Booking has duped unsuspecting Texans who shop for room rates on its various websites by omitting mandatory fees from the advertised room rate," the lawsuit reads. The practice, it argues, "thwarts comparison shopping and, consequently, allows Booking to lure unwitting consumers with artificially low room prices."

Images included in the lawsuit illustrate this with a photo of a room at JW Marriott Hill Country Resort & Spa being advertised for $409 a night on Booking.com but coming out to $546 when the customer clicks through to finalize the reservation — the price now includes a $56 hotel fee and $81 in taxes.

Here's why you can expect to see more such lawsuits

While prices for almost all goods and services in the U.S. do not include the additional sales tax, the Office of the Attorney General argues that Booking benefits from this practice by "retain[ing] a percentage of the total amount charged on mandatory fees."

Along with the namesake Booking.com, Booking Holdings also owns similar travel-booking platforms Priceline, Agoda, Kayak and Rentalcars.com. This, the lawsuit argues further, is a substantial portfolio that impacts a wide stretch of Texans.

Booking Holdings did not immediately respond to TheStreet's request for comment on the lawsuit. Similar lawsuits have been filed against competitor Expedia  (EXPE) - Get Free Report as well as hotel giant Hyatt  (H) - Get Free Report — the latter lawsuit was also filed by Texas Attorney General Ken Paxton back in May and is still ongoing.

In the past, booking platforms have defended not displaying the fees upfront by saying it was standard practice across the industry but frequent lawsuits could finally push these companies into axing it entirely — a move that will display much higher rates on the sites.

"In January, Attorney General Ken Paxton warned the industry that continued exploitative behavior would be challenged by the State of Texas," Paxton's office said in a statement on the lawsuit. "In recent months, the OAG sued Hilton  (HLT) - Get Free Report and Hyatt while settlements were reached with Marriott and OMNI  (OMNI) - Get Free Report.