Hotels.com, et al., are online travel companies OTCs which book hotel rooms and make other travel arrangements for customers who access their services over the internet. The OTCs’ business model, known as the “merchant model,” is fully detailed in Expedia v. City of Columbus , 285 Ga. 684 681 SE2d 122 2009. In sum, the consumer pays the OTC a retail “room rate” and a line item for “taxes and fees” in order to reserve and later occupy one of the City’s hotel rooms. The consumer pays nothing to the hotel for occupancy or taxes and only provides a credit card at check-in. The City of Atlanta requires the payment of hotel occupancy taxes pursuant to OCGA §48-13-50 et seq., the “Enabling Statute” which provides for municipalities to impose an excise tax “at the applicable rate on the lodging charges actually collected.” OCGA § 48-13-51 a 1 B I. Section 146-79 of the City’s ordinance provides, “there is levied and assessed and there shall be paid a tax of seven percent of the rent for every occupancy of a guestroom in a hotel in the city.” Per the Enabling Statute, these taxes are imposed upon and collected from the hotel guest. OCGA §48-13-51 a 1 B ii “Any tax levied in this Code section is also imposed upon every person or entity who is a hotel or motel guest and who receives a room. . .”. Section 146-80 of the City’s ordinance also states, “Every person occupying a guestroom in a hotel in this city is liable for the tax levied in this article.” Finally, “the person or entity collecting the tax from the hotel or motel guest shall remit the tax to the governing authority imposing the tax. . . .” OCGA §48-13-51 a 1 B ii. The taxes must be remitted to the City by the twentieth day of the month following the month in which the occupancy occurred. OCGA § 48-13-53.2 a; City of Atlanta Code of Ordinances §146-85.
Under the merchant model, the OTCs calculate the hotel occupancy tax amount based on the wholesale rate the OTC negotiates with hotels for the right to broker rooms and not on the retail room rate the OTC charges the customer for the right to occupy a room. The OTC retains whatever it has collected from the consumer over the amount of the remittance to the hotel. If the hotel fails to submit an invoice or charge to the OTC in the time period designated by contract, then the OTC retains all monies collected from the customer, including any money purportedly collected for the payment of hotel occupancy taxes.
