Hotel Class Action Lawsuit: AI Used to Inflate Prices, Guests Allege

Case Overview: A class action lawsuit has been filed against several major hotel chains, alleging that they used an AI-powered pricing algorithm to inflate prices for extended stay guests.

Consumers Affected: Guests who stayed at extended stay hotels operated by the defendant companies.

Court: U.S. District Court for the Northern District of Illinois

Major hotel chains have been conspiring to inflate prices for extended stay guest rooms by using the same AI-powered pricing algorithm, the G3 RMS, a new class action lawsuit alleges.

The lawsuit accuses the hotels of charging guests significantly higher prices due to the scheme, which involves some of the biggest names in the hotel industry, including Hilton, Hyatt, and Wyndham. As well as pushing up prices for guests, the scheme results in violations of the Sherman Antitrust Act by coordinating prices through shared algorithms, according to the lawsuit.

Hotel Guests Accuse Major Chains of Inflating Prices With AI-Powered Algorithm

California resident Christina Gonzalez and New Jersey local Dawn Hoffman filed the proposed class action lawsuit after both allegedly falling victim to the price fixing scheme. 

Gonzalez rented rooms from extended stay hotels, including Hilton’s Home2 Suites, in 2023 and 2024, according to the lawsuit, and Hoffman stayed at an Extended Stay America Suites in Tampa in 2024. Both women claim they paid inflated prices during these stays due to the hotels' alleged illegal use of the G3 RMS system to manipulate room rates.

The lawsuit alleges that Gonzalez and Hoffman, along with countless others across the country, have been victims of an anticompetitive scheme that pushes prices beyond what market competition would typically allow. 

“To make matters worse, Defendants’ scheme has harmed some of the more financially vulnerable segments of the population who have little to no choice but to rent extended stay hotel guest rooms,” the lawsuit alleges.

How G3 RMS Allegedly Coordinates Prices Across Hotel Chains

The lawsuit claims that starting in 2016, several extended stay hotel chains began using the G3 RMS system, a pricing algorithm developed by IDeaS and SAS Institute. The system pools sensitive business data from these companies, including current pricing and occupancy rates, to calculate “optimal” room rates across all participating hotels. 

Instead of setting prices independently, the hotels allegedly rely on the algorithm to generate rates, which they then automatically apply with minimal human intervention, the lawsuit alleges.

According to the complaint, this coordination across hotel chains has created an environment where prices are artificially inflated. The G3 RMS reportedly analyzes not only a hotel’s own data but also competitors' non-public information, ensuring that the rates are aligned across different brands, leaving consumers with fewer options for finding competitive prices. 

Choice Hotels, for example, adopted 93% of the algorithm’s pricing decisions without manual overrides, while Extended Stay America confirmed it uses the system to “automatically price” its guest rooms, according to the lawsuit.

Lawsuit Claims AI-Driven Price Coordination Violates Antitrust Law

The women argue that this AI-driven price coordination amounts to illegal collusion under federal antitrust law. They claim that this alleged “hub-and-spoke” conspiracy allows the hotels to share confidential business information and jointly raise prices—something that would be illegal if done through traditional means, like backroom meetings.

By using the G3 RMS, hotels allegedly gained the ability to bypass normal market competition, harming consumers who rely on extended stay hotels, particularly those in vulnerable situations such as traveling nurses, military personnel, and people displaced by natural disasters.

The lawsuit also highlights how extended stay hotels previously relied on a “heads in beds” model, prioritizing high occupancy over higher rates. However, after the financial downturn of 2008, the introduction of G3 RMS allowed the hotels to shift focus, using data-driven pricing to boost profits, often at the expense of customers.

Government Cracks Down On Algorithmic Price-Fixing Schemes

Algorithmic price-fixing allegations are not limited to extended stay hotels and have caught the attention of the federal government. The U.S. Department of Justice and the Federal Trade Commission have both become involved in several cases, filing statements of interest that challenge the use of algorithms to facilitate illegal price-fixing. 

In a separate case, Caesars Entertainment and other hotel operators were accused of colluding to inflate room rates through algorithmic pricing. The Department of Justice has also filed an antitrust lawsuit against RealPage, alleging its software allows landlords to collude and inflate rental prices, leading to higher costs for renters across the U.S.

The plaintiffs in the extended stay class action want to represent consumers from across the across in the lawsuit, and they are seeking both monetary damages and injunctive relief to end the alleged price-fixing scheme. 

Case Details

• Lawsuit: Gonzalez, et al. v. Integrated Decisions and Systems, Inc. D/B/A Ideas Revenue Solutions, et al.
• Case Number: 1:24-Cv-08262
• Court: U.S. District Court for the Northern District of Illinois

Plaintiffs' Attorneys

• Connor Cohen, Stephen E. Morrissey, Rohit D. Nath, Jesse-Justin Cuevas, Vineet Bhatia, and Shawn Raymond (Susman Godfrey LLP)
• Christopher J. Cormier, Spencer Cox, Matt Strauser, Ian Baize, Warren T. Burns, Quinn Burns, Matthew Tripolitsiotis, Leila Abu-Orf, and Barbara Bates (Burns Charest LLP)

Have you stayed at an extended stay hotel and noticed unusually high prices? Share your experiences and thoughts in the comments below.