Vegas Hotels Use Pricing Scheme to Overcharge Guests
Some of the most popular hotels and casinos on the Las Vegas strip, including the Bellagio, Caesars Palace and Wynn, are accused of colluding to overcharge their guests.
The consumer antitrust lawsuit filed this week in federal court in Nevada, names MGM Resorts International, Caesars Entertainment Inc., Wynn Resorts Holdings LLC and Treasure Island LLC as defendants.
It also names Cendyn Group LLC and its subsidiary Rainmaker Group Unlimited Inc., who supply the pricing algorithms. The lawsuit says that Rainmaker Group’s products are used by 90% of the hotels on the Las Vegas Strip.
The plaintiffs are two frequent visitors to Las Vegas who claim that they paid too much for their stays as a result of this anticompetitive scheme.
They say that hotel operators in Las Vegas shifted their pricing strategies soon after adopting Rainmaker’s algorithms That includes “increasing prices notwithstanding market conditions and tolerating the lost revenue resulting from any unrented rooms. In a competitive market, this strategy would quickly fail—any units listed at prices exceeding the market price would be undercut by competitors and thus stay empty. A Hotel Operator with overpriced, empty rooms would eventually go out of business.”
The lawsuit goes on to say that algorithm Rainmaker’s “collects confidential price information from each of the hotel operators, and then tells them, through use of various algorithms, how to price.” The company prides itself in the fact that it has a 90% acceptance rate for its pricing recommendations for Las Vegas hotels.
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After almost 20 years going to Vegas (aside from the 2020 BS) I’m pausing my visiting. Instead this year I’ve decided to go to the southeast. I haven’t been to the Atlantic and Gulf shores in just as long, so going to give that a try instead. Additionally, I have never been to New Orleans aside to hop on a boat. If nothing else, it’ll give me something new to experience.
It’s always nice to change things up and see new places.
No surprise. Hope this is the start of it for Many in this industry.
I’ve noticed Hotel pricing has gone through the roof in Las Vegas
Hotels that were 250 are 450 a night plus tax plus resort fee
Low end limited service hotels at 150 a night are 200 plus
Something is off IMO and it’s interesting to note almost all of them have significantly elevated pricing for this time of the year
Something indeed seems off
Cosmo in particular even before the MGM buyout is now extortionate
80,000 points a night.Sorry nice but not the Ritz Carlton either
Marriotts so called dynamic pricing also seems somewhat fraudulent
High prices are not fun but that does not mean government should meddle in private business and interfere with prices set. Local hotels should be able to agree on a price floor for rooms. Cut throat competition only bankrupts more in the end. We see it with airlines who competed on fares and cut out everything from magazines to individual water bottles because their competitors did the same. Then the airlines go bankrupt because they can’t survive on selling $89 fares. Quality and safety always suffer with down to 0 competition. I’d vote for the defendant on a jury and against govt. telling us what to do.
Letting them collude to set a price floor is the opposite of a free market. Not sure that is great for consumers.
If the software was not sharing the INVENTORY levels with all the other hotels, then it would be fine. Prices are available to the public obviously, but the inventory of rooms should only be known to the hotel itself. By having this software be able to analyze the entire strips inventory levels to set higher prices, then that is collusion which is illegal.
And nothing about resort fees? That’s the biggest scam.
Seems to me to be a pretty good case that there was collusion. That software shouldn’t be compiling all the different hotels inventory levels to share with the other hotels. That seems to be a legit case if that is what is actually happening.
Wow. Vegas hotels trying to squeeze extra $$ from patrons? Color me completely un-surprised.
Touché!