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US cities sue travel sites

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Several big travel sites are facing legal action in the US over unpaid hotel taxes.

Atlanta, Chicago, Los Angeles, San Antonio, San Diego and Philadelphia are all taking action against sites including Expedia, Orbitz, and Travelocity. The State of Texas is also getting involved. The different actions may be joined together as a class action case.

The cities, and state, claim that 16 named websites are guilty of paying tax on the wholesale price they pay for rooms rather than the retail rate they charge consumers.

The travel companies say they are acting as marketplaces for the rooms rather than merchants.

Michel Bernard, attorney for San Antonio, told AP that the city had been bilked of $10m since 1999.

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