The fees that online travel companies charge for booking hotel rooms in Rosemont are subject to a tax imposed by the village, a federal judge has ruled.

In an opinion Friday, U.S. District Judge Ronald A. Guzman rejected the notion that the tax imposed under Rosemont Ordinance § 10-23(a) applies only to the net rate that an online company pays a hotel or motel for a room.

Instead, the hotel tax applies to both the net rate and the additional amount the company charges the customer for whom it reserves the room, Guzman said in his opinion.

Guzman granted summary judgment in favor of Rosemont in a lawsuit the village brought seeking hotel taxes allegedly owed by seven online companies.

Guzman said the parties in the case should be prepared to discuss the "final disposition of the case" at the next status hearing.

An attorney for Rosemont, Paul M. Weiss of Freed & Weiss LLC, said the amount of taxes owed by the online companies was a "hotly contested" issue.

But Weiss predicted that the companies ultimately will be ordered to pay millions of dollars to Rosemont.

In his opinion, Guzman said the Rosemont ordinance requires the owner of a hotel or motel to collect a tax of 7 percent of the rental rate for a room and to then remit that tax to the village.

Guzman said the ordinance defines "owner" to include any entity that receives consideration for arranging the rental of a hotel or motel room.

Online companies receive such consideration from their customers in the form of the net rate that they pass on to the hotel and the fee for arranging the rental that they keep for themselves, Guzman said.

Guzman rejected the argument that the fee is not part of the rental rate because it purportedly represents payment for an online company's services rather than for the use of the room.

"Because the record establishes that defendants' customers cannot occupy hotel rooms in Rosemont unless they pay the full amount defendants charge, defendants' fees and markups are part of the rental rate subject to the tax," Guzman wrote, citing Expedia Inc. v. City of Columbus, 681 S.E.2d 122 (Ga. 2009), and Louisville/Jefferson County Metro Government v. Hotels.Com LP. 590 F.3d 381 (6th Cir. 2009).

Guzman also rejected the argument that Rosemont's hotel tax is a sales tax and therefore cannot be imposed on the cost of the websites' services.

Citing cases that included Commercial National Bank of Chicago v. City of Chicago, 432 N.E.2d 227 (Ill. 1982), Guzman conceded that services must be taxed by an occupation tax rather than a sales or use tax.

But a sales or use tax is imposed when "the substance of a transaction is the sale or use of property and the service provided is merely incidental to it," Guzman said, citing Mr. B's Inc. v. City of Chicago . 706 N.E.2d 1001 (Ill. App. Ct. 1998).

And citing cases that included Marcus Corp. v. Village of South Holland, 458 N.E.2d 112 (Ill. App. Ct. 1983), Guzman said Illinois courts have held that a tax imposed "on the privilege of renting or using a hotel room" is a use tax.

"Here, defendants' facilitation of travel-related services, i.e., providing room rates for multiple hotels on their websites, confirming with the hotel that there is an available room, etc., are incidental to the predominant purpose of the online transaction — the rental of a hotel room," Guzman wrote, citing Springfield Hotel-Motel Association v. City of Springfield, 457 N.E.2d 1017 (Ill. App. Ct. 1983), and Katz v. City of Chicago. 532 N.E.2d 322 (Ill. App. Ct. 1988). "Because the transactions in this case are for the use of tangible personal property, not services, the hotel tax is a valid use tax, not an impermissible occupation tax."

Guzman issued his ruling in Village of Rosemont, Illinois v. Priceline.Com Inc., et al. No. 09 C 4438.

In addition to Weiss, the lead attorneys for Rosemont are Karl P. Barth and Steve W. Berman, both of Hagens, Berman, Sobol, Shapiro LLP in Seattle.

Defendants Priceline.com Inc. and Travelweb LLC are represented by attorneys with Skadden, Arps, Slate, Meagher & Flom LLP who include Albert L. Hogan and Nick D. Campanario.

The lead attorneys for defendants Travelocity.com LP and Site59.com LLC are Luke DeGrand of DeGrand & Wolfe P.C. and Stacy R. Russell and Stacy S. Russell, both of Kelly, Hart & Hallman LLP in Houston.

The lead attorneys for defendants Travelocity.com LP and Site59.com LLC include Luke DeGrand of DeGrand & Wolfe P.C.

The defendants did not have a comment by early afternoon today.