Two Great Neck-based businesses were snared in an investigation by Connecticut Attorney General George Jepsen for alleged hotel room-price fixing and agreed to pay a $50,000 fine together with a Massachusetts-based hotel management group.
“This agreement will end an artificially imposed practice that drove up room rates at certain hotels,” Jepsen said. “The settlement will help to restore a competitive marketplace by providing consumers the opportunity to obtain prices for hotel accommodations that were set by the market, not by collusion.”
The settlement was reached with McSam Hotel Group LLC and Metro Tel Hotel LLC, two Great Neck-based businesses whose sole owner and manager is prominent New York City hotel developer Sam Chang. Both businesses are located at 420 Great Neck Road.
The Connecticut attorney general also reached agreement with Jamsan Hotel Management, Inc. of Lexington, MA.
McSam owns the Holiday Inn Express and Homewood Suites Hartford Downtown, both on Asylum Street in Hartford. Metro Ten owns the Holiday Inn Express in Waterbury. Jamsan operates that hotel under an agreement with Metro Ten.
The attorney general’s investigation found that the practice of “call-arounds,” sharing of confidential, non-public information, allowed competing hotels in close proximity to exchange sensitive competitor information at least once a day about occupancy and current room rates that may be used – and in the case of Waterbury Holiday Inn Express – was used to fix rates for hotel rooms.
Fixing rates violates Connecticut’s antitrust and unfair trade practices act.
The terms of the settlement require the companies together to pay the state a $50,000 civil penalty and stop “call-arounds” at their three Connecticut hotels, as well as those they own and operate in other states. Under the agreement, the companies did not admit liability.
The attorney general’s investigation uncovered evidence that the practice was “widespread and long-standing in the hotel and hospitality industry, both within Connecticut and nationally.”
McSam Hotel Group LLC had no comment. Metro Ten Hotel LLC could not be reached for comment.
This is the second settlement concerning call-arounds reached by the attorney general’s office. The first was in April, 2010, with the national hotel chain LaQuinta. It agreed to stop the practice in its hotels, but it was not required to pay a civil penalty because of its cooperation early in the investigation.
