"What we are doing is not unlike what traditional travel agents and tour operators have done for 40 or 50 years," Stagner said. "They've had tour operators and travel agents in the city for years and they've never once gone after any of them."
As booking hotel reservations online has increased in popularity over the last decade, so have disputes on how taxes should be paid to the cities.
The Anaheim case could set a precedent for disputes in other cities that rely on tourism to feed city and county coffers, from Newport Beach to Broward County, Fla. Such destinations allege that they also are being stiffed by the travel sites, while the travel companies say they are mere middlemen, and should not be taxed as if they were hotel operators.
Los Angeles has a pending lawsuit against the travel websites that dates back to 2005, when the city alleged that it lost an estimated $10 million a year because web-based companies underpaid their taxes.
In 2006 San Diego's city attorney sued a dozen online travel companies, accusing them of failing to pay $30 million.
The stakes are especially high in Anaheim, which features tourist attractions and has 20,000 hotel rooms and a busy convention center. The tax on hotel rooms is the city's support system, bringing in about 30% of its annual budget -- $87.1 million last year.
In Anaheim, both the city and the travel sites contend that they have legal precedent on their side.
The travel companies say that four federal judges have ruled in their favor in recent years, including a favorable District Court ruling last year in Louisville, Ky. and an appellate court dismissal last month of a suit by Pitt County in North Carolina.
But the Anaheim hearing officer, in his ruling, cited cases in which cities won, such as in the dispute between San Antonio and Hotels.com. In one suit against Expedia, the court ruled in favor of Columbus, Ga., citing the danger that a "gaping loophole" could be established if people did not have to pay tax based on the amount they paid for the room.
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tony.barboza@latimes.com
