Shelby County to sue travel Web sites - WMC Action News 5 - Memphis, Tennessee

Reported by Andrew Douglas

Shelby County to sue travel Web sites

MEMPHIS, Tenn. (WMC-TV) - Shelby County commissioners claim bargain travel Web sites like Travelocity, Expedia and Orbitz are costing the county millions of dollars, and now the county wants to sue.

They say the companies are pocketing millions of dollars in hotel tax money that belongs to Shelby County. County leaders are taking steps to file litigation to get that tax money, which could be $2 million a year.

Travel Web sites have become so enormously popular that each year they buy up thousands of hotel rooms, including local ones. 
"They buy rooms in bulk and pay the lower wholesale hotel/motel tax," said commisioner Steve Mulroy. "But then, when they sell to individual consumers, they charge the higher retail hotel/motel tax."   
The difference could be as much as 30 percent, and that could translate to about $2.5 million dollars each year.

Mulroy and other county commissioners are one vote away from teaming up with a national law firm that would go after the internet travel companies to recoup those millions of dollars.

"It won't cost us anything, and I think that's one reason we ought to go forward with it," said Mulroy. "The lawyers that will take this will take this on a contingency basis. We can't lose."
But can the county actually win? Other municipalities are filing suit, and Shelby County leaders like Mulroy insist they can't afford to ignore the potential suit.

"The tax base is not going to be there whether we like it or not. We got to find some creative ways in order to raise revenues."

Other cities that have filed similiar suits include San Antonio, Charleston and Myrtle Beach.

Click here to e-mail Andrew Douglas.


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