Four LVS casino resort companies allegedly colluded to artificially increase room rates

Four LVS casino resort companies allegedly colluded to artificially increase room rates

Caesars Entertainment and three other Las Vegas Strip (LVS) casino resort operators have been dragged to court of law as they allegedly colluded, via data-sharing software, to artificially increase the prices of their hotel rooms.

In a class-action antitrust lawsuit filed earlier this week, four LVS casino resort operators, viz. Caesars Entertainment, Treasure Island, Wynn Resorts Holdings, and MGM Resorts International, have been blamed for collusion to fix room rates to maximize their profits.

There are a total of 33 resorts on or near the LVS, and 26 of them are under the control of the aforementioned four operators. The class-action lawsuit alleges that it was precisely the operators’ dominance on the resort market that allowed them to artificially inflate hotel room rates via their alleged scheme.

According to a report published by the Las Vegas Review-Journal, Seattle-based law firm Hagens Berman’s attorneys claimed that a revenue management platform known as Rainmaker supply information about real-time pricing data from competitors, allowing operators to formulate highest possible rates to maximize profits. They also claim that Rainmaker platform, which is employed by 90 per cent of LVS resorts, is in violation of the Sherman Antitrust Act. In addition to the Strip casino resort operators, Florida-based hospitality data analytics firm Cendyn Group (parent Rainmaker) has been named in the class-action suit.

The class-action antitrust suit, filed in U.S. District Court, wants the court of law to force the four casino resort operators to repay/compensate plaintiffs who were forced to dishonestly overpay.

Steve Berman, a managing partner at Hagens Berman, said in a press release, “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.”

In a normally competitive market, operators fix the price of their hotel rooms independently, while trying to fill the maximum possible number of rooms. But, Rainmaker’s information sharing and algorithms setting software displaces normal competitive pricing, leading to increased room prices. Rainmaker’s proprietary software, called Guestrev, makes an analysis of hotel guest room supply information, and then artificially suppresses supply so that it can make pricing recommendations inclined toward resort operators. Such a practice is being criticized as anticompetitive.

E-mails seeking comment have been sent to the four aforementioned defendants but no replies have been received yet.

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