Las Vegas Hotels Face Lawsuit Over Room Rate Inflation Scheme

Big names

Four of the biggest hospitality and gaming companies in Las Vegas are facing a class-action lawsuit over allegations they conducted an illegal room price-fixing scheme.

The Hagens Berman law firm issued a press release on Wednesday to announce it has filed the lawsuit in the US District Court of Nevada. The defendants in the case are Caesars Entertainment, Wynn Resorts, Treasure Island, MGM Resorts International, Cendyn, and Rainmaker. The latter is a revenue management platform used by the majority of Las Vegas Strip hotels, with Cendyn its parent company.

unlawfully maximize profits for its hotel operator users”

The lawsuit alleges that Rainmaker collected supply and pricing info in real-time from competitors for its users. It then provided recommendations for room rates that were “designed to unlawfully maximize profits for its hotel operator users,” claim the plaintiffs. The legal team believes that the algorithmic system hurt consumers and also violated anti-trust laws.

Higher prices for rooms

This lawsuit argues that operators of hotels independently price rooms in a competitive market, helping them fill as many rooms as they can. Rainmaker’s systems allegedly skew competitive pricing, leading to higher prices for consumers. Hagens Berman outlined in its press release that anyone who rented a Las Vegas Strip hotel room from January 25, 2019 onwards might have overpaid.

Oultlining his intentions with the class action lawsuit, Hagens Berman managing partner Steve Berman said: “What happens in Vegas will no longer stay in Vegas. We intend to expose the under-the-table deals perpetrated by these Vegas hotels, and we intend to hold them accountable.”

A wide-reaching lawsuit

Hotel room prices in Las Vegas are now at record highs. For the 2022 fiscal year, the average daily room rate was about $196.37 and the occupancy rate reached approximately 83%. Rainmaker claims to be able to grow hotel operator revenue by 15%, performing well even in tough market conditions.

control about 20 of the 30 casino resorts on the Las Vegas Strip

The hotel operators named as defendants control about 20 of the 30 casino resorts on the Las Vegas Strip. The lawsuit claims that the significant control that these operators have over the market is what enabled the alleged scheme to succeed.

Hagens Berman believes that the use of Rainmaker provided an incentive to hotel operators to keep the supply of rooms suppressed, which drives up prices. The lawsuit aims to get repayments for consumers who overpaid.

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