Suits target resort fee shock
Attorneys general for Nebraska and the District of Columbia have taken aim at one of the travel world’s hot-button issues: the disclosure of resort fees, which hotels charge for amenities you may or may not use. ¶ Lawsuits filed last month by Karl Racine of the District of Columbia and Douglas Peterson of Nebraska against Marriott and Hilton, respectively, call the fees deceptive and misleading. ¶ Representatives for Marriott and Hilton declined to comment on the suits.
Before you pop the Champagne corks, note that the issue that put resort fees on the legal radar is the way they’re disclosed, not the fact they exist.
“We’ve never asked anyone to stop charging resort fees,” said Meghan Stoppel, Nebraska assistant attorney general. “What our concern is is that the entire price [should be shown] upfront to the consumer for price comparison,” said Stoppel, chief of the office’s consumer protection bureau.
The suits hope to end this scenario: You are booking a hotel room, thinking you’re paying $120 a night. You know there will be taxes, but you get to the end of the booking and find that besides taxes, you are being assessed a resort fee. In some cases that may be as much as $95 a night, said Charles Leocha, cofounder of Travelers United, which advocates for travelers and has been a major player in issues involving the travel industry, including airlines.
What hotels count on, said Kurt Ebenhoch, executive director of advocacy group Travel Fairness Now, is consumer “exhaustion” at the end of the booking process that makes punching the “book” button the path of least resistance.
It may or may not be the path of least expense because comparing prices can be difficult.
If this sounds familiar, it’s because airlines were doing much the same thing once upon a time. Prices were “base fares” that did not include taxes and fees, which could vary by airline.
The Department of Transportation finally put a stop to this, but it took several years before the rules were in place, said Leocha, who was part of the push for greater transparency on airline pricing.
Hotel resort fees also have been an issue among consumers and attorneys general for some years. But unlike the airlines, hotels don’t have a DOT watching over them.
Instead, hotels were scolded by the Federal Trade Commission, which has a consumer protection bureau.
In 2012, the FTC received a letter from consumer advocates about what it calls “drip pricing,” which the agency that year described as “a technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process. The additional charges can be mandatory charges, such as hotel resort fees or fees for optional upgrades and add-ons.”
The FTC issued a warning to several hotels, but since then, things have seemed quiet. Quiet on the surface, perhaps, but the nation’s attorneys general have been working on the issue, Stoppel said.
On July 9, Racine sued Marriott “following an investigation by the attorneys general in all 50 states and the District of Columbia regarding the pricing practices of the hotel industry,” the Marriott suit said, noting, “Marriott’s motive in continuing this deceptive practice is pure profit. It has reaped hundreds of millions of dollars over the last decade from this deceptive ‘drip pricing.’ ”
On July 23, Peterson filed Nebraska’s suit against Hilton, noting that “a resort fee is a mandatory, nightly fee purportedly charged to cover the value of certain amenities offered at resort properties” and adding that “defendant began charging similar mandatory fees at its non-resort properties … in larger cities.” You might find these listed as “urban destination fees” or “daily mandatory charges.”
Whatever you call them, the real issue, Ebenhoch said, is choice — or lack thereof. Consumers must pay the fees if they want to stay at certain properties.
Hotels say there are few such properties, but Californians are apt to encounter the charges in their home state and favorite destinations Hawaii and Las Vegas, where several properties last week announced a resort fee increase to $45 a night.
It’s possible we haven’t heard the last from the nation’s attorneys general. Some hotels have been proactive in addressing the issue, but some, Stoppel said, have not.
When you consider how much hotels have collected, it’s a transparency issue worth pursuing. Those resort fees totaled almost $3 billion in 2018, Bjorn Hanson said in Consumer Reports.
Hanson, a professor at the Tisch Center of Hospitality at New York University, predicts an even greater total in 2019.
If you’re a family on a budget, an extra $45 a night is a pretty big chunk of change. If you know upfront what the fees are, you can budget for them. Or not. Comparing full prices is the best way, but not always easy for now, like so much else involving travel.
“We love travel,” Ebenhoch said. “We are not opposed to travel. We just want [hotels] to treat people fairly ... in a transparent way.”