Distribution channel shake up?

The Atlanta Journal Constitution reports that "the Georgia Supreme Court on Monday handed the city of Columbus an important victory in a high-stakes lawsuit against online travel companies." It is a ruling that could presage major changes in how the big-daddies of internet distribution like Expedia, Hotels. com etc. are forced to rethink their current relationship with hotel providers and could upend what has, heretofore, been a tremendously successful business model for them.

Its implications for hotels is no less significant if the ruling sets a precedent for lawsuits by tax jurisdictions around the country including New York that now appear to be heading for a decision. This site has previously noted how the lawsuits seem to seek to redress what, at the very least, is a lack of transparency on the part of the distribution channels that ends up short changing the consumer and jurisdictions while giving an enormous degree of control over inventory to the distribution channels. Regardless of the outcome of lawsuits in other jurisdictions, the status-quo is unlikely to continue as most hotel majors have rolled out best rate guarantee programs chip away at the portals' sway over the hotels. While the lawsuits do not herald the demise of portals they arguably will result in a shake out that better reflects their role as intermediaries and a more concomitant compensation for them.