Texas AG Says Hotel Practiced Price Gouging After Ike

February 11, 2009

Texas Attorney General Greg Abbott has charged the owner of Starlight International Inc., which operates a Rodeway Inn franchise in Sealy, Texas, with price gouging. According to the state’s enforcement action, the defendants unlawfully increased room rates by as much as 140 percent during Hurricane Ike.

The Office of the Attorney General (OAG) reported that an investigation showed the hotel increased room rates after Gov. Rick Perry’s Sept. 8, 2008, disaster declaration was issued. The governor’s disaster declaration triggered provisions of the Texas Deceptive Trade Practices Act (DTPA), which prohibits price gouging. The statute applies to fuel, food, lodging, medicine and other necessities vendors.

After Hurricane Ike made landfall in September 2008, state investigators discovered the defendant’s hotel charged evacuees a higher, “special event” rate for rooms during the declared disaster.

According to court documents, the defendants, Hsiang-Ting “Angel” Huang and Wei-Cheng “Michael” Kao, increased rates for children and other extra guests. They also charged state and local taxes even after the governor waived those taxes.

Huang, 50, the owner of Starlight International, and Kao, 49, a manager at the hotel, are both named in the state’s enforcement action. Choice Hotels International, which franchises several hotel brands, including Rodeway Inn, has not been implicated in the allegations. The defendants have attempted to refund the state and local hotel taxes to some of their customers.

The OAG is seeking restitution for customers, up to $20,000 in penalties per violation of the DTPA and up to $250,000 in penalties if customers are 65 or older.

Source: Texas Attorney General’s Office

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