The Algorithm Defense Is Collapsing: Inside the Hotel Industry’s Price-Fixing Reckoning

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Two federal appeals courts looked at hotels using the same pricing software as their competitors and reached opposite conclusions. Now the United Kingdom is asking the same question. Every property running a “smart” revenue tool needs to understand why.

For years the sales pitch behind algorithmic revenue management was a kind of moral hygiene: let the machine read the market, and no human will ever have to collude. In 2026 that pitch has become Exhibit A. The question courts are now asking is whether “letting the algorithm decide” is simply a more efficient way for competitors to fix prices without ever picking up the phone (Reuters, 2026; BakerHostetler, 2026).

The thesis is not that dynamic pricing is illegal. No court has ruled that yet. The thesis is that hotels can no longer assume it is automatically legal just because a human never shook hands in a back room. Two circuits looked at nearly the same fact pattern and split. That split is the whole story, and it is now the operating environment for every revenue manager whose vendor also sells to the property across the street.

Same software, same question, two different answers

In Nevada, consumers sued Caesars Entertainment, MGM Resorts, and Cendyn Group — maker of the Rainmaker platform — alleging Las Vegas Strip hotels used shared algorithmic software to coordinate room rates. A district court dismissed the case in 2024. The Ninth Circuit affirmed that dismissal in August 2025 in Gibson v. Cendyn Group, holding that independent decisions to use the same price-setting software did not, by themselves, amount to an illegal agreement. In April 2026 the Supreme Court declined review, leaving the dismissal intact (Bloomberg Law, 2026; Arnold & Porter, 2025).

In New Jersey, a nearly identical theory reached the opposite result. Cornish-Adebiyi v. Caesars Entertainment accused Atlantic City casino-hotels — among them Borgata, Hard Rock, Caesars, Harrah’s, and Tropicana — of using the same Rainmaker platform to coordinate pricing. A district court dismissed that case too. On July 29, 2026, the Third Circuit reversed and sent it back for discovery. It is the first federal appellate court to let algorithmic price-fixing claims of this kind survive a motion to dismiss (Justia, 2026; Mondaq, 2026).

Circuit Judge Theodore McKee’s panel found the plaintiffs had plausibly alleged a hub-and-spoke conspiracy built on three pillars: hotels moved prices in the same direction even as occupancy fell; hotels exchanged non-public commercial data through the shared platform; and hotels followed the software’s recommendation roughly 90 percent of the time despite retaining the technical ability to override it (Mondaq, 2026; JD Supra, 2026). Average rates in the complaint climbed from $142 to $175 between 2019 and 2025 while room nights sold and occupancy both declined — the kind of “prices up, demand down” pattern that makes a court lean forward.

The court’s most consequential line was not about the software at all. It was about pleading. Requiring plaintiffs to explain a competitor’s proprietary algorithm before they have had a chance to subpoena it would be, the panel said, “neither required nor appropriate.” That single holding is why lawyers across the industry are calling the decision a turning point regardless of how the case ultimately resolves. It lowers the bar for the next complaint (Foley & Lardner, 2026; National Law Review, 2026).

It is not just Vegas and Atlantic City

The Cendyn cases are the most-cited. They are no longer the only ones. A federal case filed in San Francisco, and dismissed in July 2025, named six major operators — Hilton, Wyndham, Four Seasons, Omni, Hyatt, and Choice Hotels — alleging they used IDeaS’ G3 RMS revenue management system, built by Minnesota-based Integrated Decisions and Systems and its parent, SAS Institute, to coordinate pricing across the Bay Area–Oakland–Fremont metro. The complaint’s core sentence could be pasted onto almost any shared analytics platform in any industry: antitrust law does not allow competitors to exchange competitively sensitive information through an intermediary any more than it allows them to exchange it directly (CBS San Francisco, 2024).

A third suit, filed in the Northern District of Illinois by plaintiff Ryan Segal and since dismissed with prejudice, named Amadeus IT Group alongside Hilton, Marriott, and The Ritz-Carlton Hotel Company, alleging the hotels used Amadeus’ Demand360 occupancy-data platform to keep luxury room rates artificially high. The numbers in that complaint are stark: average daily rates for luxury hotels rose 28 percent between 2019 and 2023 while occupancy fell 8 percent — prices “untethered from room occupancy,” the filing said, and significantly outpacing inflation. The proposed class covers consumers who paid for a luxury room from those defendants between October 2018 and May 2024 (Top Class Actions, 2024).

Then the United Kingdom opened its own file

On March 2, 2026, the U.K. Competition and Markets Authority launched a formal probe into whether Hilton, IHG, Marriott, and CoStar’s STR benchmarking platform shared competitively sensitive pricing data in a way that let hotels coordinate rather than compete. The CMA’s framing was direct: when rival businesses share competitively sensitive information — including through a third-party analytics provider — “this reduces the uncertainty competing businesses normally have about how each other will act” (Competition and Markets Authority, 2026a; Reuters, 2026b).

STR is not Cendyn or IDeaS. It is positioned as a benchmarking and competitive-intelligence tool rather than a price-recommendation engine, which makes the CMA’s decision to look at it notable in its own right. Regulators are no longer drawing a bright line between “tools that set your price” and “tools that just tell you what everyone else’s price is.” Both are now fair game. CoStar said it was “surprised at the CMA’s interest in a long-standing hotel data analytics and benchmarking platform.” Hilton and IHG pledged full cooperation (Hospitality Investor, 2026; Boutique Hotelier, 2026).

The software can be the meeting. No phone call required.

The precedent every revenue team should actually read

The clearest preview of where this could land for hotels is not a hotel case. It is RealPage. The Department of Justice sued the apartment-industry pricing vendor in August 2024 over nearly identical allegations: collecting non-public rental data from competing landlords and using it to generate recommendations that suppressed competition. RealPage settled in November 2025. The consent decree is a blueprint: a ban on algorithms using competitors’ confidential information during live pricing runs; a requirement that any model-training data be at least 12 months old; a prohibition on geographic pricing segments narrower than statewide; the removal of features that prevented prices from moving down; and court-appointed compliance monitoring (U.S. Department of Justice, 2025; Associated Press, 2025).

Assistant Attorney General Abigail Slater’s line when the deal was announced should be taped to the revenue office wall: “With the rise of algorithmic and artificial intelligence tools, we will remain at the forefront of vigorous antitrust enforcement” (U.S. Department of Justice, 2025). State attorneys general have kept going. In September 2026, the District of Columbia extracted $9.3 million from two landlords in a related RealPage matter (Office of the Attorney General for the District of Columbia, 2026). The theory is traveling. Hospitality should assume it will visit.

What “legal” actually means right now

No court has ruled that dynamic pricing software is illegal. What courts are increasingly ruling is that hotels cannot treat independent adoption of a shared tool as a complete defense at the pleading stage — at least not in the Third Circuit, and not when the complaint alleges non-public data in, high acceptance out, and prices rising as occupancy falls (Justia, 2026; BakerHostetler, 2026).

For an independent or boutique operator using a lightweight tool rather than Rainmaker, G3 RMS, or Demand360, the direct legal exposure today is genuinely lower. These cases target large chains and casino groups with dense geographic clustering, the exact fact pattern that makes a hub-and-spoke theory plausible. That is not the same as immunity. Every operator should still be asking the vendor a version of the question plaintiffs’ lawyers are asking in federal court: what data feeds this recommendation, whose data is it, and how often does this property follow it without a human override?

The bottom line

The algorithm was supposed to be the neutral party — the tool that removed human bias and collusion risk from pricing decisions entirely. Courts and regulators in two countries have been testing the opposite theory, and although two of the U.S. suits have since been dismissed, the question is not settled: that a shared algorithm, fed by shared data, following the same logic at every competing property, might be the single most efficient coordination mechanism regulators have ever had to investigate. Precisely because no human ever had to break the law out loud to make it happen.

Until the Supreme Court resolves the circuit split, or until a trial produces a verdict instead of a pleading standard, the prudent property treats the revenue-management contract the way it treats the franchise agreement: as a document that can put the building in a federal caption. Ask the vendor the data question in writing. Keep the override log. And do not confuse a high acceptance rate with a good night’s sleep.

References

Arnold & Porter. (2025, August 25). Ninth Circuit clarifies antitrust implications of algorithmic pricing.

Associated Press. (2025, November 25). New limits for a rent algorithm that prosecutors say let landlords drive up prices. https://apnews.com/article/realpage-doj-lawsuit-settlement-rent-data-4d8985a50c28b6322b8f82a2fbb5c79e

BakerHostetler. (2026, July 30). Third Circuit revives algorithmic price-fixing claims in casino-hotel case in precedential opinion. Lexology.

Bloomberg Law. (2026). High court turns away price-fixing case against Vegas hotels. https://news.bloomberglaw.com/antitrust/high-court-turns-away-price-fixing-case-against-vegas-hotels

Boutique Hotelier. (2026, March 2). CMA investigating Hilton, Marriott and IHG over data sharing. https://www.boutiquehotelier.com/cma-hilton-marriott-ihg-data-sharing-case/

CBS San Francisco. (2024). Major antitrust suit alleges 6 hotel chains with Bay Area locations colluded to fix prices. https://www.cbsnews.com/sanfrancisco/news/major-antitrust-suit-alleges-6-hotel-chains-with-bay-area-locations-colluded-to-fix-prices/

Competition and Markets Authority. (2026a, March 2). CMA launches investigation into hotel chains. https://www.gov.uk/government/news/cma-launches-investigation-into-hotel-chains

Competition and Markets Authority. (2026b). Suspected anti-competitive conduct in relation to hotel accommodation services. https://www.gov.uk/cma-cases/suspected-anti-competitive-conduct-in-relation-to-hotel-accommodation-services

Cornish-Adebiyi v. Caesars Entertainment, Inc., No. 24-3006 (3d Cir. July 29, 2026).

Foley & Lardner. (2026, August). Third Circuit revives algorithmic price-fixing claims against Atlantic City hotel casinos. https://www.foley.com/insights/publications/2026/08/third-circuit-revives-algorithmic-price-fixing-claims-against-atlantic-city-hotel-casinos/

Hospitality Investor. (2026, March 5). UK competition probe follows wave of US hotel price-fixing lawsuits. https://www.hospitalityinvestor.com/brands/uk-competition-probe-follows-wave-us-hotel-price-fixing-lawsuits

Justia. (2026). Cornish-Adebiyi v. Caesars Entertainment Inc, No. 24-3006 (3d Cir. 2026). https://law.justia.com/cases/federal/appellate-courts/ca3/24-3006/24-3006-2026-07-29.html

Morgan Lewis. (2026, August 5). Cornish-Adebiyi: The Third Circuit speaks on pleading standards for challenges to AI-driven price benchmarking. JD Supra.

National Law Review. (2026). Third Circuit revives algorithmic price-fixing claims against Atlantic City hotel casinos.

Office of the Attorney General for the District of Columbia. (2026, September 14). Attorney General Schwalb secures $9.3 million from two DC landlords in RealPage price-fixing scheme. https://oag.dc.gov/release/attorney-general-schwalb-secures-93-million-two-dc

Reuters. (2026a, July 29). US court revives lawsuit claiming AI software fueled price-gouging by New Jersey casinos. https://www.reuters.com/legal/government/us-court-revives-lawsuit-claiming-ai-software-fueled-price-gouging-by-new-jersey-2026-07-29/

Reuters. (2026b, March 2). UK watchdog probing Hilton, IHG, Marriott, CoStar for data sharing. https://www.reuters.com/sustainability/boards-policy-regulation/uk-competition-watchdog-launches-probe-into-information-sharing-among-hotels-2026-03-02/

Top Class Actions. (2024). Hilton, Marriott and Ritz-Carlton hotels involved in price-fixing scheme, class action alleges. https://topclassactions.com/lawsuit-settlements/lawsuit-news/hilton-marriott-and-ritz-carlton-hotels-involved-in-price-fixing-scheme-class-action-alleges/

U.S. Department of Justice. (2025, November 24). Justice Department requires RealPage to end the sharing of competitively sensitive information and alignment of pricing among competitors [Press release]. https://www.justice.gov/opa/pr/justice-department-requires-realpage-end-sharing-competitively-sensitive-information-and

Wilson Sonsini. (2025). DOJ settles its algorithmic price-fixing case against RealPage. https://www.wsgr.com/en/insights/doj-settles-its-algorithmic-price-fixing-case-against-realpage.html

Correction, September 26, 2026: An earlier version of this article described the San Francisco case against six hotel operators and the Segal v. Amadeus case as still pending. Both have been dismissed. The article has been updated.

Sources and further reading

• Cornish-Adebiyi v. Caesars Entertainment Inc, No. 24-3006 (3d Cir. 2026) — Justia (U.S. Court of Appeals for the Third Circuit opinion), 2026-07-29
• High Court Turns Away Price-Fixing Case Against Vegas Hotels — Bloomberg Law, 2026-04-20
• UK competition probe follows wave of US hotel price fixing lawsuits — Hospitality Investor, 2026-03-05
• Justice Department Requires RealPage to End the Sharing of Competitively Sensitive Information and Alignment of Pricing Among Competitors — U.S. Department of Justice, Office of Public Affairs, 2025-11-24
• Attorney General Schwalb Secures $9.3 Million from Two DC Landlords in RealPage Price-Fixing Scheme — Office of the Attorney General for the District of Columbia, 2026-09-14
• Major antitrust suit alleges 6 hotel chains, with Bay Area locations, colluded to fix prices — CBS San Francisco, 2024-04-29
• Hilton, Marriott and Ritz-Carlton Hotels involved in price-fixing scheme, class action alleges — Top Class Actions, 2025-08-11