• Propmodo Focus
  • Posts
  • 2/22/24: CoStar's Hotel Data Subsidiary, STR, Entangled in New Antitrust Lawsuit

2/22/24: CoStar's Hotel Data Subsidiary, STR, Entangled in New Antitrust Lawsuit

Defining the future of real estate

AuthorAuthor

Franco Faraudo & Holly Dutton
February 22, 2024

Propmodo Daily

By Franco Faraudo · Feb. 22, 2024

Greetings!

2024 is shaping up to be the year that lawsuits changed the real estate industry. Besides the bombshell commission split lawsuits that have put the residential real estate industry on its back foot, there have been plenty of others. RealPage and Yardi have both been hit with antitrust lawsuits for their pricing tools. Now, CoStar’s hotel data subsidiary STR is facing the same scrutiny. We read through the brief of this new case, so you don’t have to.

Also, indoor air quality became a major priority for building owners and operators during the pandemic as they aimed to bring workers back to the office safely. Now that the worst of the pandemic is behind us, we explore the evolving factors driving interest in indoor air quality.

Now, let's dig in!

CoStar's Hotel Data Subsidiary, STR, Entangled in New Antitrust Lawsuit

Can a pricing algorithm constitute anti-competitive behavior? This question is central to a series of lawsuits nationwide. The initial legal actions targeted RealPage, alleging that its YieldStar pricing software, which calculates rental prices using data from competitors, breached The Sherman Act. Subsequently, a law firm that filed the first lawsuit brought a similar case against Yardi for its pricing tool.

Now STR, the hotel data company bought by CoStar for $450 million in 2019, is being sued under the same pretense. The lawsuit claims that the prevalence of STR in the industry, the forward-looking pricing advice it provides, and the “give-to-get” nature of the service all make it and its users guilty of monopolistic practices.

The plaintiffs compiled some data to help them make their case. They collected data from 6,000 hotels in the U.S. and found that using STR resulted in “an average overcharge of at least 4.3% for Hotel Operators’ five-star hotels, after accounting for hotel characteristics, location, and quality.”

Much like the RealPage and Yardi lawsuits, the plaintiff’s attorneys are using the company’s own statements in earnings calls and sales documentation against them. “As of late 2019, Andrew Florance stated that the ‘second largest competitor is probably one-fortieth the size, maybe 2 to 3% the size,’” the brief states.

It also uses Florance’s words to allege STR is making statements about how it suggests pricing rather than just conveying data. It reads, “Andrew Florance, CEO of CoStar, stated that ‘there is clear demand in my mind for the forecasting component of the business where you are gathering forward information and forecasting future demand in the market and future pricing.’”

This lawsuit is more than a minor issue for CoStar. The legal costs could be significant, even for a large company like CoStar. But a bigger concern is the potential impact on its hotel clients. As similar lawsuits become more common, property companies may start to hesitate before using their data services. Property owners are now faced with the task of weighing the benefits of data services, such as pricing, against the growing risk of being involved in an antitrust lawsuit.

Is Indoor Air Quality Still a Priority for Building Owners and Occupants?

Indoor air quality became a major focus for building owners and operators during the pandemic as they looked to bring workers back to the office safely. But now that the pandemic is mostly behind us, what’s driving the conversation behind indoor air quality is being driven from a few different directions.

READ ONLINE (https://propmodo.com/is-indoor-air-quality-still-a-priority-for-building-owners-and-occupants/)

Insider Insights

🌓 Fed divided: Fed meeting notes suggest that their members are divided on when they should start to ramp down rates now that inflation has not fallen to desired levels.

👷‍♂️ Bond, construction bond: UAE-based developer Binghatti announced that it will issue an Islamic debt bond to raise money as its credit rating struggles.

A Guide to the Building Efficiency Mandates Sweeping Across the U.S.

READ ONLINE (https://propmodo.com/a-guide-to-the-building-efficiency-mandates-sweeping-across-the-u-s/)

A Look at Rent Growth in Top Cities With Office-To-Residential Conversions

READ ONLINE (https://propmodo.com/a-look-at-rent-growth-in-top-cities-with-office-to-residential-conversions/)

Overheard

Are You Enjoying This Newsletter?

Propmodo Daily is written and edited by Franco Faraudo with contributions from readers like you and the Propmodo team.

📧 Forward it to a friend and suggest they check it out.

🔗 Share a link to this post on social media.

🗣 Have ideas for future topics (or just want to say hello)? Share your feedback and tips at [email protected] or connect with us on X through @propmodo.

✅ Not subscribed yet? Sign up for this newsletter here.

📫️ Please add our newsletter email, [email protected], to your contacts to make sure you don’t miss any updates.

Explore Propmodo

Enjoy reading about trends and innovation in commercial real estate? Subscribe to Propmodo.com for unrestricted access to reliable, data-driven journalism and exclusive insights available only to subscribers.

Interested in sponsoring this newsletter? Contact us here