Could the use of algorithms to set hotel rates become illegal?

Several class action lawsuits allege that simply having access to algorithmic pricing information constitutes illegal collaboration between business rivals

Apr 30, 2024

Two recent « statements of interest » filed by the FTC/DOJ warn that, in their view, using a platform such as Rainmaker (now known as Cendyn Revenue Cloud for hotel rooms) or RealPage (for apartment rentals) could potentially violate the long-standing Sherman Antitrust Act of 1890, even without evidence of collusion among competitors.

Key takeaways

• The DOJ suggests that the mere presence of algorithmic pricing solutions can be viewed as an « invitation » to participate in price-fixing schemes; the use of such solutions implies an « agreement » among users to unreasonably restrain trade;
• For the many regular users of mainstream revenue management software, however, this is uncharted territory. According to the DOJ, « algorithms represent a new frontier;
• It’s important to distinguish revenue management software from collusion with algorithms. In fact, I believe that revenue management tools like dynamic pricing benefit consumers as much as they benefit businesses.

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