A trial alleging a conspiracy to fix room prices at Atlantic City hotels has found in favor of major hotel companies including Caesars Entertainment and MGM Resorts.
Cendyn's Rainmaker software in the spotlight
U.S. District Court Judge Karen Williams, who heard the case in Camden, New Jersey, dismissed the proposed class action, Reuters reports. The plaintiffs alleged that the hotels coordinated their prices using a shared revenue management system developed by Cendyn.
Consumers accused the hotels of using software called "Rainmaker" to plan their prices together. The plaintiffs say the system allowed the hotels to share sensitive information, including current room rates and occupancy rates. They claimed that this led to less competition and higher room prices for guests.
The case also attracted the attention of federal regulators earlier this year, who expressed interest in the trial.
However, Judge Williams ruled that the plaintiffs had not provided sufficient evidence to support their allegations of price fixing. The court found that the plaintiffs did not have specific facts about how the hotels used the confidential data after receiving it through the platform. The judge emphasized that there was no clear evidence that the hotels coordinated their actions or followed Rainmaker’s recommendations in setting prices.
The lawsuits against the hotels: part of a larger legal fight
The decision is part of a trend as similar lawsuits against hotel companies are being filed across the country. A related case in Nevada involving major players like Wynn Resorts was also dismissed earlier this year, although the plaintiffs have appealed. Both lawsuits alleged that the hotels used artificial intelligence systems to coordinate prices, which the plaintiffs called a new form of price fixing.
Despite the allegations, Cendyn and the hotel operators have denied any wrongdoing from the start. They said the hotels retained the right to set their own prices for their rooms and had not entered into illegal price-fixing agreements. The defendants also noted that while technology can help with pricing decisions, it does not force all competitors to charge the same prices.
The final dismissal of the New Jersey lawsuit was a significant victory for the hotel operators. The outcome could impact other hotel litigation that is also examining the use of software and AI to manage prices.