Las Vegas Strip hotels conspired to raise prices, lawsuit says

Hotels on the Las Vegas Strip used a “revenue management platform” to set illegally high <a href=room rates and undercut competition, a class action lawsuit says.” title=”Hotels on the Las Vegas Strip used a “revenue management platform” to set illegally high room rates and undercut competition, a class action lawsuit says.” loading=”lazy”/>

Hotels on the Las Vegas Strip used a “revenue management platform” to set illegally high room rates and undercut competition, a class action lawsuit says.

Visitors who’ve rented rooms on the Las Vegas Strip within the last four years have filed a class action lawsuit against four of the largest gaming and hospitality companies in the city, saying that the hotels engaged in a price-fixing scheme to inflate room rates, according to lawyers.

The lawsuit, filed on Jan. 25, says that 90% of hotels on the strip use a revenue management platform called Rainmaker, which has an algorithm that recommends future, room-specific prices to hotels.

Rather than encouraging hotels to fill all of their rooms, Rainmaker focuses on helping hotels maximize their profits at the expense of consumers, the lawsuit says.

“In a competitive market, any empty hotel room is lost revenue, so a hotel operator would try to fill each hotel room by granting concessions or lowering prices,” the lawsuit says. “By contrast, on Rainmaker Group’s recommendations and as an integral part of the conspiracy, Hotel Operators kept prices high and some rooms empty, knowing their co-conspirators would not undercut these supracompetitive prices.”

A spokesperson for Cendyn Group, Rainmaker’s parent company, declined to comment.

Unlike sites such as Expedia and TripAdvisor, which display current pricing and allow consumers to compare rates but don’t influence how hotels set their prices, Rainmaker uses its own algorithms to recommend future prices to hotels, and all the hotels that use it adopt the “same future pricing strategy,” Steve Berman, managing partner of Hagens Berman, the law firm seeking to represent consumers in the case, said in a statement.

This “algorithmic-driven price-fixing” violates antitrust laws, the law firm said in a news release.

“Our antitrust attorneys have uncovered what appears to be an unlawful agreement in which Rainmaker collects and shares data between Vegas hotel competitors to unlawfully raise prices of hotel rooms,” Berman said in a statement. “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.”

The hotels

The class action lawsuit names Cendyn Group and four casino and hospitality companies as defendants: MGM Resorts International, Caesars Entertainment Inc., Treasure Island LLC, and Wynn Resorts Holdings.

Together, the operators own 20 of the 30 hotels on the Las Vegas Strip , including Caesars Palace, The Cromwell, the Bellagio, Mandalay Bay, the Encore at Wynn, and more, according to the news release from Hagens Berman.

Wynn Resorts declined to comment. Caesars Entertainment and Treasure Island did not respond to requests for comment from McClatchy News.

A spokesperson for MGM Resorts called the claims against the company “factually inaccurate.”

“We intend to defend ourselves vigorously against these meritless claims,” the spokesperson said in a statement.

According to the Las Vegas Review Journal, room prices on the Las Vegas Strip hit record highs in 2022. The first time the average rate per night went above $200 was in October 2022, when average nightly rates were reported at $209.89 and $225.69, according to the outlet.

Las Vegas had more than 32 million visitors in 2021, according to Travel Weekly. That was up from 19 million visitors in 2020 but down from 42 million visitors in 2019.

Class action

Listed as plaintiffs on the lawsuit are a resident of Washington who visited Las Vegas in 2021 and 2022 and a resident of Florida who stayed on the Las Vegas Strip in 2022. Hagens Berman is asking anyone who stayed at any of the hotels owned by the defendant companies on or after Jan. 25, 2019, to fill out a form and join the class action suit.

The complaint says there are tens of thousands “if not hundreds of thousands” of people who could be affected. The lawsuit is seeking an unspecified amount of damages.

“By incentivizing its users to suppress the supply of hotel rooms, Rainmaker artificially drove up prices and directly harmed consumers,” Berman said in a statement. “These corporations created a scenario in which the house will always win, and they’ve broken the law to do so.”

Madeleine List is a McClatchy National Real-Time reporter. She has reported for the Cape Cod Times and the Providence Journal.

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