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Office of Emergency Management
Attorney General Abbott Charges Houston Area Hotel With Price Gouging
Sealy Rodeway Inn accused of illegally raising rates following Hurricane Ike
HOUSTON– Texas Attorney General Greg Abbott today charged the owner of Starlight International, Inc., which operates a Rodeway Inn franchise, 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.
"Today’s enforcement action charges the defendants with violating the state’s price gouging law," Attorney General Abbott said. "An investigation by the Office of the Attorney General indicates these defendants unlawfully raised hotel room rates in an attempt to profiteer from Hurricane Ike. To protect evacuees and other storm victims, Texas law prohibits vendors from attempting to increase profit margins after the Governor issues a disaster declaration."
Media links
Texas Attorney General's lawsuit against Starlight International, Inc. (1.98mb PDF)
An investigation by the Office of the Attorney General (OAG) revealed that 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.
Texans who encounter price gouging should call the OAG’s consumer hotline at (800) 252-8011. Information collected is relayed directly to agency investigators. Texans may also report other disaster-related scams to the hotline, including home-repair scams and charity scams.
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