Fresno joined a growing list of cities that are suing Web-based hotel reservation companies, claiming the cities are not receiving their fair share of hotel taxes from the sale of the rooms.
The City Council voted in closed session Tuesday to join a class-action lawsuit brought by the city of Los Angeles against 11 travel companies in 2005.
Fresno may be losing about $500,000 annually, although the precise amount is unclear, said Fresno City Attorney James Sanchez.
By joining L.A.'s lawsuit, Fresno might be able to recover revenues from as far back as 2001.
Cities and counties across the United States contend that the online room sellers buy rooms at a wholesale cost and charge customers more. The room sellers, they say, only pay taxes on the wholesale price, not the price their customers paid for the room.
"The practice has been going on for at least five years," Sanchez said. "We are looking at going back as far as we legally can."
But an industry trade group says communities like Fresno are misinformed.
The Interactive Travel Services Association, which represents Web-based travel companies, said its members pay hotel taxes when they buy bundles of rooms at discounted rates.
Any additional money the travel companies receive from reselling the rooms isn't subject to the tax because that money is not paid to the hotels, the association said in a statement posted on its Web site. Association officials could not be reached for comment Tuesday.
The hotel tax in Fresno is 12%, netting the city about $10 million each year.
Renena Smith, the city's budget manager, said the city has not prepared an audit of delinquent hotel taxes.
"If we prevail, it would be good news for our general fund," said Smith, referring to the city's projected budget shortfall next year.
The list of companies engaging in the alleged scheme against Fresno and other communities is a who's who of online reservation agencies, including: Hotels.com, Hotwire, Cheap Tickets Inc., Cendant Travel Distribution Group, Expedia Inc., Lodging.com, Lowest Fare.com, Maupintour Holding, Orbitz, Travelweb, and Travelnow.com.
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