Hotel Pricing Software Is Back in Court. How to Book a Room Smarter

On July 29, 2026, the federal appeals court in Philadelphia revived a lawsuit accusing Atlantic City casino-hotels of using shared Cendyn "Rainmaker" software to fix room prices, almost a year after a West Coast appeals court upheld the dismissal of a similar Las Vegas case. For travelers, nothing changes at checkout yet: hotels can still raise and cut rates as demand moves, so what protects you is how you book. That means comparing all-in prices, choosing a rate you can cancel and rebook, and letting a price alert watch the rate for you.

Key takeaways

Hotels have priced rooms by demand since the late 1980s. What is new is software sold as AI, and lawsuits over whether competing hotels sharing one tool that pools their private data amounts to price-fixing.
The Third Circuit's July 2026 decision only lets the Atlantic City case proceed, and the hotels have sought time to ask for a rehearing. No hotel has been found liable, and the Ninth Circuit's 2025 Las Vegas ruling went the other way on narrower allegations.
Since May 12, 2025, a Federal Trade Commission rule has required hotels, vacation rentals and booking sites to show the total price including mandatory resort or destination fees. Government taxes may still be listed separately.
Hilton says its prepaid nonrefundable rates are commonly 8% to 15% below its Best Available Rate. In an illustrative three-night stay, a refundable rate that later drops $40 a night and is rebooked ends up about $34 cheaper than prepaying.
Big events cut both ways: about 80% of World Cup host-city hoteliers said in May 2026 that bookings were behind forecast, yet New York rates roughly doubled the night before the July final.

What it means for you

Booking months ahead: a refundable rate plus a price alert keeps your options open, while prepaying comes out cheaper unless the rate later falls by more than the prepaid discount or you cancel. The break-even math is in the refundable vs prepaid section.
Booking last minute: no rule says rates fall as the date approaches; they follow the hotel's demand forecast. Compare the all-in price, since mandatory fees must now be included.
Traveling for a big event: early forecasts can be wrong in both directions. Book something refundable early and keep checking, as the section on big events shows.
Loyalty members: member discounts can be deepest on prepaid rates. Hilton's terms put its Honors advance-purchase discount at commonly 10% to 17% off the Best Available Rate, against 8% to 15% for the standard version, and both are nonrefundable.
Booking through a travel site instead of direct: the federal fee rule covers both, but change and refund terms can differ, so read the rate rules on the site you actually pay.
Families who need flexibility: the extra cost of a refundable rate buys the right to cancel. Note the cancellation deadline, which varies by hotel and rate.

Old pricing, new legal fight

Revenue management is the practice of changing room prices and availability with forecast demand. It came to hotels from the airlines. A 1988 New York Times report described yield-management software built for hotels, according to an industry history published by Hospitality Net. Varying room rates with demand is not new.

Two things have changed. First, the software is faster and is increasingly sold as AI, though adoption is uneven. In an August 2025 SiteMinder survey of 700 hoteliers across seven countries, 36% said they updated prices monthly or less and 49% said they were actively looking for AI tools. SiteMinder sells hotel software. Many hotels still reprice slowly, so a rate checked on Monday is not guaranteed to move by Friday.

Second, regulators and plaintiffs have challenged a specific setup: competing hotels feeding private data into the same vendor's algorithm and accepting its price recommendations. In March 2024, the FTC and the Justice Department told the Atlantic City court that hotels cannot use an algorithm to do what would be illegal if a person did it.

What the courts have decided so far

Case	Court and date	Outcome	Why
Gibson v. Cendyn (Las Vegas Strip hotels)	Ninth Circuit, Aug. 15, 2025	Dismissal affirmed	Plaintiffs did not allege that the software pooled one hotel's confidential data into prices for its rivals
Gibson v. Cendyn	US Supreme Court, Apr. 20, 2026	Review denied	The Court declined to take the case; no ruling on the merits
Cornish-Adebiyi v. Caesars (Atlantic City casino-hotels)	Third Circuit, July 29, 2026	Dismissal reversed and case sent back to the trial court; hotels sought time to request rehearing	Plaintiffs alleged that hotels shared nonpublic pricing and occupancy data through the software and accepted its recommendations about 90% of the time

The Ninth Circuit opinion says its analysis "might change" if the Las Vegas plaintiffs had alleged data pooling. The Supreme Court docket shows certiorari denied on April 20, 2026. In the Atlantic City case, the Third Circuit noted in a footnote that plaintiffs will face a higher burden at the next stage. The hotels then won extra time to ask the court for a rehearing; the public copy of the docket, last updated September 14, 2026, showed no ruling on rehearing. This is a summary of court rulings for general information, not legal advice.

California's shared-algorithm law

California's AB 325 was signed on October 6, 2025 (Chapter 338, Statutes of 2025) and, according to a California Energy Commission notice, took effect January 1, 2026. It is not specific to hotels. A "common pricing algorithm" is any methodology, including software, "used by two or more persons, that uses competitor data" to recommend or influence a price. A pricing tool that many hotels license from one vendor can meet that definition if it draws on competitor data.

The law makes using or distributing such a tool unlawful in two cases only: as part of a contract, combination or conspiracy to restrain trade, or when the user coerces another business to adopt the tool's recommended price. The law also makes antitrust suits easier to bring: a complaint under the state's Cartwright Act only has to show that a conspiracy is plausible, without ruling out independent action. Pricing software used without an agreement among rivals and without coercion falls outside both bans, so the law does not end dynamic pricing in California.

The all-in price rule for hotels

The FTC's Rule on Unfair or Deceptive Fees (16 CFR part 464) covers two things: live-event tickets and short-term lodging. Lodging includes hotels, motels, inns, short-term rentals and vacation rentals. Any business that shows a price for those must also show the total price, more prominently than other pricing information. That includes online travel agencies, which the FTC declined to exempt. Here is what the rule means in practice:

Included in the total: every mandatory fee, such as a resort, destination or amenity fee you cannot decline.
Allowed outside the total: government taxes and charges, plus optional add-ons such as parking you choose. The nature and amount of any excluded charge, and the final amount you will pay, must be shown before you pay.
Banned: misrepresenting any fee, including its purpose, amount or refundability.
Not banned: charging resort fees or changing prices. The Federal Register notice states that the rule took effect May 12, 2025 and does not prohibit dynamic pricing.

States can go further. California's Honest Pricing Law has applied to hotels and short-term rentals since July 1, 2024, and, like the federal rule, lets government taxes be listed separately, according to the California Attorney General. When comparing two hotels, compare the total price, then check the tax line on the final screen.

Refundable vs prepaid: the math

Most hotels sell the same room at two kinds of rates. A flexible rate can be canceled free until a deadline. A prepaid or "advance purchase" rate is cheaper, but it is charged up front and cannot be refunded. Hilton's advance purchase offer page, checked in October 2026, says these discounts commonly run 8% to 15% off its best available rate. They require booking at least seven days ahead and full prepayment, and bookings cannot be modified. For the Honors member version of the rate at hotels in the US, Canada, Mexico and the Caribbean, the terms allow canceling by phone at least three days before check-in if you book a new prepaid Honors stay at the same time; the refund comes minus a $25 or $50 service fee, depending on the brand.

A refundable rate has one advantage the prepaid rate lacks: if the price falls, you can book again at the lower rate and cancel the original. Dynamic pricing makes that more likely, because rates move with the forecast.

Illustrative example. Three nights at a hotel with a $250 flexible rate, a $220 prepaid rate (12% less) and a mandatory $25-a-night destination fee. A 14% tax is applied to rate plus fee. Three weeks before arrival, the flexible rate drops to $210.

Choice	Rate x 3 nights + fees	Tax (14%)	Total paid
Flexible rate, price never drops	$825.00	$115.50	$940.50
Prepaid rate	$735.00	$102.90	$837.90
Flexible rate, rebooked at $210	$705.00	$98.70	$803.70
Prepaid rate, trip canceled	$735.00	$102.90	$837.90 lost

If the price never drops, prepaying saves $102.60. If it drops to $210 and you rebook, the flexible rate wins by $34.20. If the trip is canceled, the prepaid traveler loses $837.90 (Hilton lets some member bookings be swapped for a new prepaid stay for a fee, which helps only if you can still travel) while the flexible traveler loses nothing, provided they cancel before the deadline. The flexible rate only comes out ahead on price if the drop is bigger than the prepaid discount:

Switching beats prepaying when:  new flexible rate < prepaid rate
Here: $210 < $220, so savings = 3 nights x ($220 - $210) x 1.14 = $34.20

flexible rate = cancellable rate at booking ($250)
prepaid rate  = nonrefundable rate at booking ($220)
new flexible rate = the lower cancellable rate found later

The lesson is narrow: a 12% prepaid discount needs a drop of more than $30 a night to beat, which is not guaranteed. The flexible rate's main value is the right to cancel, and any price drop is a bonus on top.

Google can watch a single property for you. Since April 17, 2026, Google Search and Google Hotels let signed-in users track individual hotels and get an email when rates change significantly for their dates. Before that, tracking worked only city-wide. Before you rebook, book the new rate first, confirm it, and only then cancel the original before its deadline.

What big events do to rates

The 2026 FIFA World Cup tested event pricing. In an American Hotel & Lodging Association survey released May 4, 2026, about 80% of hoteliers in the 11 US host markets said bookings were behind their initial forecasts. Roughly half reported large releases of FIFA room blocks, and 65% to 70% cited visa barriers and geopolitical concerns.

The peaks were still sharp. CoStar data reported by Hotel Online shows New York City's average daily rate for July 12–18, 2026 was $425.03, up 41.5% from the same week a year earlier. On Saturday, July 18, the night before the final, the rate was up 105.1%. The sharpest increase fell on a single night rather than across the whole week, which is why a refundable booking made early, then re-checked, is the safer approach for event trips.

Frequently asked questions

Is it legal for a hotel to change its prices every day?

Yes. A hotel setting its own rates in response to demand is ordinary competition, and the FTC's fee rule says explicitly that it does not prohibit dynamic pricing. The legal disputes concern competitors allegedly coordinating through a shared tool that pools their nonpublic data, which the FTC and Justice Department say is no more lawful when an algorithm does it.

Can a hotel still charge a resort fee?

Yes. The federal rule does not ban any type of fee; it requires mandatory fees to be included in the total price shown up front and bans misrepresenting what a fee is for or whether it is refundable. A resort fee that appears only at the final checkout step, with a lower nightly price shown earlier, is what the rule targets.

Does the Atlantic City ruling mean the hotels fixed prices?

No. The Third Circuit ruled only that the complaint's allegations were enough to let the case continue, and it noted that plaintiffs must prove their claims with evidence at later stages. The hotels have also sought time to ask the appeals court for a rehearing. Any eventual outcome, including whether guests could recover money, depends on those steps and on further proceedings in the New Jersey federal court.

Does Google's hotel price alert work for every hotel and language?

As of Google's April 2026 announcement, individual-hotel tracking was available globally to users signed in to a Google account and using Search in English or Spanish. Google sends an email when rates change "significantly" for your dates. The announcement does not define that threshold, so a small drop may not trigger an alert.

Does California's AB 325 stop hotels there from using pricing software?

No. The law covers tools used by two or more businesses that draw on competitor data, which can include a vendor's software licensed by many hotels. But using such a tool is unlawful only as part of an agreement that restrains trade, or when someone coerces others into adopting its recommended prices. Software that uses only a hotel's own data, with no competitor data, is outside the definition entirely.

A booking checklist for 2026

Compare hotels on the total price, including mandatory fees, then check the tax line before paying.
Price both rate types. If the prepaid discount is small or your plans could change, take the refundable rate.
Write down the cancellation deadline in the rate rules; it varies by hotel and rate.
Turn on a price alert for the exact hotel and dates.
If the rate drops below what you paid, book the new rate first, confirm it, then cancel the old one before its deadline.
Booking through a travel site? Read that site's change and refund terms, since they can differ from booking direct.
For event trips, book something refundable early, then keep checking as match or show dates approach.