Online travel sites ordered to pay $21 million to Anaheim

Online travel websites have been ordered to pay Anaheim $21 million in hotel taxes that officials say they are owed, but the companies are fighting back against the increasingly common claim that they have shortchanged cities from Los Angeles to Las Vegas.

The fight in Anaheim is the latest in an escalating debate between online travel companies and tourist-dependent cities. San Diego, for instance, alleges that it lost more than $30 million by 2006 and Los Angeles says it is losing about $10 million a year.

The travel sites, however, maintain that cities like Anaheim are trying to use old-school formulas that don't make sense in the cyber age.

Anaheim, which banks heavily on tourist dollars generated by Disneyland and the city's convention center, began legal proceedings against eight online travel companies, including Expedia, Hotels.com, Orbitz and Travelocity, in 2007, saying that the firms were not paying their fair share of the city's 15% hotel tax.

The city argued that the online reservation companies were paying taxes only on the wholesale price they arrange with the hotels, not the full retail price customers actually pay to book rooms online.

Get the full story at: Los Angeles Times