Hotel Pricing AI Software Faces Test After Court Revives Atlantic City Case

A federal appeals court has ruled that a lawsuit against Atlantic City casino hotels can proceed, raising questions about the implications of AI-driven pricing software in the hospitality industry. The case centers on Cendyn Group's Rainmaker revenue management platform, which several competing hotels allegedly used to generate room rate recommendations.

The plaintiffs argue that this allowed the software to function as a tool for coordinating prices among competitors, even if no human communications took place. While the court did not rule on the substance of the allegations, it acknowledged that they were serious enough to allow the case to continue. The hotels deny any wrongdoing and insist that the real issue at stake is whether competition actually occurred.

Antitrust law, according to the law firm Mandelbaum Barrett PC, does not differentiate between manual and automated price coordination. The distinction is significant because pricing software has become ubiquitous across the industry, used by independent hotels, hotel brands, management companies, and restaurant groups. Many businesses lack insight into what data feeds their pricing recommendations or how the numbers are processed.

This lack of visibility presents a potential risk, as operators may only discover they are exposed to antitrust scrutiny after a lawsuit. The firm advises hotels to ask vendors and legal teams several key questions about their software, including the types of data used, the extent of review before setting prices, and the terms of vendor contracts.

As AI-driven pricing tools become more prevalent in various industries, courts and regulators are expected to continue examining how these systems operate. While technology can aid decision-making, the ultimate legal responsibility remains with the business owners.