Law waters down Branson suit against online travel agencies

A law signed last week by Gov. Jay Nixon may slow lawsuits filed by the city of Branson and St. Louis County against travel service and ticket sales companies such as Expedia Inc. (Nasdaq: EXPE).

Under the new law, online travel companies such as Expedia are exempt from local hotel taxes because they don’t actually provide a room.
Rep. Shane Schoeller, R-Willard, attached the provision to a broader local-tax bill, H.B. 1442, to spare Expedia from double taxation and from the expense of fighting the lawsuits.

Brent Thompson, Expedia’s vice president of government affairs, said the suits are trying to force online travel companies to pay local hotel taxes.

The legislation was sponsored by Missouri Rep. Timothy Jones, R-Eureka.

“The intent of the law and the champions and authors is to clarify current law and to eliminate the need for the courts to rule on this,” said Thompson, who is based in Washington, D.C. “So I think our expectation is with this clarification the litigation would no longer be necessary and those cases would go away.”

Thompson said it makes Missouri a better business climate.

“It’s kind of tough to have localities suing the very business model that is trying to prosper in Missouri and hire more people,” Thompson said. “I think we feel like the legislation was a great active leadership and a significant improvement in the business climate in Missouri.”

Expedia signed a five-year lease in February to occupy 59,000 square feet of the 150,000-square-foot former Springfield-Branson National Airport terminal beginning in the fall for $236,000 a year – plus a common-area maintenance charge of $3.64 per square foot annually, according to previous SBJ coverage. Once the move is complete, Expedia will be in Schoeller’s district.

The provision, Schoeller said, makes the suits unnecessary and eliminates the excess tax.
“If you’re an online travel company, as long as you don’t own the tickets that you purchase, whether it’s a room, or a music show or anything like that, if you don’t actually take possession of it, you would not pay taxes on it,” Schoeller said.

Thompson said the cost of fighting lawsuits Expedia won’t incur makes the new law beneficial.

“We’re hopeful that the lawsuits will be dismissed to the consequence,” Thompson said. “Defending lawsuits is costly and it’s distracting and we want to bring some quietude to the tax-treatment of the business model in Missouri.”

The company currently is at 4124 S. McCann Court. Expedia offers online booking for flights, hotels, rental cars and other vacation packages.[[In-content Ad]]