Overview
A class action lawsuit has been filed against several prominent hotel chains, accusing them of using an AI-powered pricing algorithm to artificially inflate room rates for extended stay guests.
Who Is Affected?
Consumers who stayed at extended stay hotels operated by the defendants are at the center of this lawsuit.
Accusations Against Major Hotel Chains
The lawsuit alleges that major hotel chains have colluded to drive up prices for extended stay accommodations using the G3 RMS pricing algorithm. Plaintiffs claim this coordination led to violations of antitrust laws, including the Sherman Act, by enabling the hotels to manipulate rates at the expense of consumers.
Plaintiffs Allege Inflated Prices Through AI-Driven Algorithm
The lawsuit was filed by Christina Gonzalez from California and Dawn Hoffman from New Jersey, who stayed in extended stay hotels operated by the defendants in 2023 and 2024. They claim the pricing scheme caused them to pay significantly inflated rates.
The lawsuit further alleges that this practice has disproportionately harmed vulnerable groups such as traveling nurses, military personnel, and those displaced by natural disasters, who often rely on extended stay accommodations.
How the G3 RMS Algorithm Allegedly Works
The G3 RMS system, implemented by several extended stay hotel chains starting in 2016, is designed to optimize room rates based on shared data, including pricing and occupancy levels. However, the plaintiffs claim the algorithm enables illegal price coordination by analyzing both public and non-public competitor data.
Instead of setting prices independently, hotels allegedly rely heavily on algorithm-generated rates. Some hotel chains reportedly adopt over 90% of these algorithm-generated pricing decisions with little to no manual intervention, creating a market environment where prices are uniformly inflated.
Allegations of Antitrust Violations
The plaintiffs argue that the use of the G3 RMS system constitutes illegal collusion under antitrust laws. They describe the scheme as a “hub-and-spoke” conspiracy, where the AI algorithm acts as the hub connecting the spokes—various hotel chains—to coordinate pricing strategies that bypass competitive market forces.
This practice, the lawsuit claims, undermines consumer choice and allows hotels to increase profits at the expense of customers.
Federal Government’s Stance on Algorithmic Price-Fixing
The federal government has shown growing concern over the use of algorithms to facilitate price-fixing. Similar lawsuits have been filed in other industries, with the Department of Justice and the Federal Trade Commission actively investigating these practices.
In a related case, hotel operators have faced lawsuits for allegedly using AI to inflate room rates. Similarly, the Department of Justice has filed an antitrust lawsuit against RealPage, accusing the company of enabling landlords to coordinate rental price hikes through its software.
What This Means for Consumers
The plaintiffs in this class action lawsuit are seeking monetary damages and injunctive relief to halt the alleged price-fixing scheme. If successful, this lawsuit could set a precedent for how AI-powered pricing tools are regulated in the future.
Case Details
- Lawsuit: Gonzalez, et al. v. Integrated Decisions and Systems, Inc., et al.
- Case Number: 1:24-Cv-08262
- Court: U.S. District Court for the Northern District of Illinois
At Class Action Winning, we’re committed to keeping you informed about important legal cases affecting your rights. If you’ve stayed at an extended stay hotel and suspect you paid inflated rates, share your experiences and stay connected for updates.
