I was booking a hotel room via Agoda in the United States and saw that the claimed original price was much higher than the hotel price rate if booked at the hotel front desk or using the official hotel's website. I assume that Agoda is trying to inflate the claimed original price so that the "Agoda discount" appears more impressive than it actually is.

This made me wonder: Can hotel booking companies make up any "original price" they want, or does the claimed original price have to be somehow grounded in reality?

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  • 12
    This is probably very locale-specific. In France for instance, there are situations where a retailer needs to prove a product was actually sold for the advertised non-sale price for a significant amount of time, but I don't think it's universal (I believe it applies at least during sale periods), though the rules tend to become stricter. No idea if that applies to hotel rates.
    – jcaron
    Commented Apr 21 at 23:43
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    Same for Belgium and most of Western Europe: discounts can only apply to prices that have been actively advertised for at least X time. E.g. I can't inflate the price today and call the original price a discount tomorrow, but I could inflate my price today and call it a discount one year later. The specific value of X and the limitations of the protection are location-specific.
    – Flater
    Commented Apr 22 at 4:52
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    @jcaron This should be an answer.
    – quarague
    Commented Apr 22 at 6:20
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    @Flater This should be an answer.
    – quarague
    Commented Apr 22 at 6:21
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    Not the same in the US, though I think it should be. Not sure about what the details must be either. I remember working in sporting goods at Wal-Mart and having to go through and raise all the prices on lures one day. Then a few weeks later we went through and lowered the price on many of them (but still higher prices than they were a few weeks before) and had all this advertising for 'Rolling Back Prices'. What a joke. Commented Apr 23 at 20:19

2 Answers 2


About Agoda specifically, there is ongoing pre-certification class proceedings, initiated in the Superior Court for the State of California and subsequently removed to the US District Court for the Southern District of California. Here is the originating complaint: David E. Martinez v. Booking Holdings Inc. et al. (Complaint, June 3 2020, Case No. 37-2020-00018413-CU-BT-CTL). The federal court docket is at 3:20-cv-01289 (S.D. Cal.). The plaintiff alleges that Agoda:

has a uniform policy and practice of claiming fake discounts. It does this by, among other ways, expressly claiming that rooms are "discounted" and by listing an arbitrary fake base price (which it calls the "original price"), which purports to be the price at which the room is ordinarily rented to consumers. The fake original prices are in fact significantly higher than the true prices at which the rooms are ordinarily rented. Based on this fake original price, Defendant then lists a discount or sometimes "percentage off" that the current price of the room represents. This creates the misleading impression in the mind of the consumer that they are getting a good deal on the room. In fact, the overwhelming majority of rooms offered are never, or almost never, rented at anything but Agoda's stated (final) price.

The complaint notes (at para. 29) that 16 C.F.R. Section 233.1 "specifically prohibits the advertising of false, 'phantom' price reductions and discounts off of inflated, fictitious 'regular' prices that never actually existed." For reference, 16 C.F.R. Section 233.1 says:

If ... the former price being advertised is not bona fide but fictitious — for example, where an artificial, inflated price was established for the purpose of enabling the subsequent offer of a large reduction — the “bargain” being advertised is a false one

The causes of action alleged are several statutory causes of action under California's consumer protection legislation, breach of contract, breach of warranty, and unjust enrichment.

The claim is presently stayed (on hold) pending the outcome of arbitration.

The Competition Act, s. 74.01 requires "that when a business advertises a sale price by relating it to a higher regular price (the full price of the product without any discounts), the business must be able to validate the regular price" by reference to either its own previous pricing or the pricing of suppliers generally.

An explainer is here. The Competition Bureau says:

If someone puts a phoney regular price on a product, merely to cross it out and claim that the item is marked down, the consumer might not be getting any saving at all. And, if the consumer is deceived, the market is not operating fairly.

Some example enforcement actions:

  • Amazon.ca agreed to pay a $1 million penalty and $100,000 in costs for posting an unverified "regular price" that created the impression that prices for items offered on Amazon.ca were lower than prevailing market prices (see January 11, 2017 News Release).
  • Hudson's Bay Company agreed to pay a $4 million penalty and $500,000 in costs to resolve allegations that it "offered sleep sets at inflated regular prices and then advertised deep discounts on these prices, suggesting significant savings to consumers (see May 8, 2019 News Release).
  • Michaels agreed to pay a $3.5 million penalty after the Competition Bureau concluded that Michaels promoted picture frames for sale at a "substantial discount" but did not ensure that the frames were first offered for sale in good faith at the higher price (see May 6, 2015 News Release).
  • 19
    So the answer is No, but that doesn’t stop them from doing it anyway?
    – Dúthomhas
    Commented Apr 21 at 22:52
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    @Dúthomhas Laws per se never stop any from "doing it anyway." What stops people from doing it is deterrence: If you believe that if you do something, you're likely to get caught and to be punished strongly enough that it isn't worth doing the thing, then you don't do it. Laws are an important part of deterrence, but they're only the first step. Commented Apr 22 at 0:37
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    Strictly speaking, the fines may just be the cost of doing business. Many years ago, Canadian businesses were fined if they opened on Sundays. Some companies made so much money that they simply paid the fine and opened on Sundays anyways.
    – Nelson
    Commented Apr 22 at 1:05
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    @nick012000 nah, they'll only stop once the regular fines outweigh the benefits of the practice. And given how ridiculously corporate-friendly our "justice" system often is, that is sometimes years later
    – Hobbamok
    Commented Apr 22 at 8:20
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    @MasonWheeler And apart from laws, there are many factors that might stop or prevent people from doing bad stuff. Some people and even some businesses have moral values. This might, of course, put businesses at a competitive disadvantage.
    – gerrit
    Commented Apr 22 at 8:39

Without touching on the allegations that Agoda, specifically, is inflating their reported prices, the published "rack rate" for a hotel room, is, in fact, generally a fair bit higher than the street price which you can book it for in practice.

Think of the rack rate as the price charged for a last-minute reservation for a hotel room on the city or location's busiest and most popular night of the year -- Saturday night of a summer holiday weekend at the beach, Tuesday night of the biggest sales event of the year next to a convention center.

It's also the rate that a hotel can charge people who refuse to vacate a room after their booking expires, or (possibly) the daily rate a hotel can charge people who leave a room unusable until it can be restored to service. (Laws on this vary from state to state, like many things.)

In Bermuda and India certain taxes are calculated as a percentage of the room's rack rate, but I have not heard of any US jurisdictions doing the same.

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