A new lawsuit alleges that resorts on the Las Vegas Strip colluded to illegally inflate prices for hotel guests, KTLA sister station KLAS reports.
Caesars Entertainment, MGM Resorts International, Wynn Resorts and Treasure Island are named along with Cendyn Group and Cendyn subsidiary The Rainmaker Group — makers of software used to compare and adjust hotel room prices.
The lawsuit seeks class action status and alleges antitrust violations by the four resort companies, which control 20 of the 30 biggest resorts on the Vegas Strip.
Lawyers are seeking more participants to join the lawsuit but initially list the plaintiffs as Richard Gibson, of Washington, and Heriberto Valiente, of Florida. Both rented rooms in Las Vegas — Gibson at the MGM Grand and Valiente at the Bellagio.
The suit alleges that software produced by Rainmaker, enabled the resorts to fix prices by sharing their room rates. A confidential informant cited in the lawsuit alleges that 90% of the hotels on the Strip use Rainmaker’s products. A former employee said a colleague said, “We’re just about in every hotel on the Strip.”
Rainmaker’s algorithms “are specifically intended to raise profits for Hotel Operators while discouraging them from maximizing occupancy of hotel rooms (i.e., supply),” the lawsuit alleges.
That algorithm, centered on profit rather than adjusting for lower demand, constitutes antitrust, the lawsuit argues, saying it works because participants agree not to undercut competitors’ prices.
“This is not how a competitive market works: in a competitive market, any empty hotel room is lost revenue, so a hotel operator would try to fill each hotel room by granting concessions or lowering prices. By contrast, on Rainmaker Group’s recommendations and as an integral part of the conspiracy, Hotel Operators kept prices high and some rooms empty, knowing their co-conspirators would not undercut these supracompetitive prices,” according to the lawsuit.
KLAS reached out to the resort companies listed as defendants in the lawsuit early Thursday afternoon.
“The claims against MGM Resorts are factually inaccurate, and we intend to defend ourselves vigorously against these meritless claims,” according to an MGM Resorts spokesperson.
A spokesperson for Wynn Resorts had no comment Thursday.
The Nevada Resort Association declined to comment.
The Associated Press requested comment from Rainmaker. Michael Bennett, a representative of Boca Raton, Florida-based Cendyn, declined to comment.
Pricey Room Rates
The average daily room rate in Las Vegas was at its highest in September 2022, breaking the $200 barrier for the first time ever at $209.89. The average on the Strip was $225.69, according to published reports from the Las Vegas Convention and Visitors Authority.