The day after Mayor Rahm Emanuel secured passage of a budget with more than $755 million in tax, fee and fine increases, City Hall delivered a bit of good financial news.
The administration announced Thursday that city lawyers concluded a 10-year-old case against travel websites that offer discount hotel rates. As a result, Expedia, Hotels.com and Hotwire will pay the city about $29 million, according to a court order in the case.
The total represents the amount of hotel taxes still owed by those three companies to the city between 2005 and 2014, said Bill McCaffrey, city Law Department spokesman. During that period, the websites were paying hotel taxes based on the amount they paid to hotel companies for the rooms, but not the markup they pocketed when selling to their customers, he said.
As of Jan. 1, the three travel sites began paying hotel taxes to the city on the amount they charged their customers for the rooms, McCaffrey said. Hotel tax collections pour into the city’s fund used to cover day-to-day operating expenses. Next year, the city expects to collect about $110 million from hotel taxes.
“We are pleased with this judgment, which represents 100 percent of the relief we were seeking,” city Corporation Counsel Stephen Patton said in a statement. “This is just the latest example of the city’s ongoing efforts to enforce its taxing ordinance against companies that try to avoid paying the full amount due. This effort is even more important given the city’s current financial challenges.”