FTC Takes Aim at ‘Resort Fees’
Feds have targeted luxe properties
that don’t include mandatory
surcharges in prices
By MARSHALL KRANTZ
The federal government last month fired a warning shot at the hotel industry over one of the most contentious issues between hoteliers and their guests, including event planners and attendees: ancillary charges often billed as resort fees.
For the first time, the Federal Trade Commission (FTC) threatened hoteliers with legal action if they continue an online pricing practice called “drip pricing,” in which charges for specific amenities like newspapers, in-room safes and use of the hotel exercise room are excluded from an otherwise total price, consisting of room rate plus taxes, displayed at booking.
The FTC sent a letter to operators of 22 hotels stating that an investigation “found that in at least some instances mandatory resort fees are not included in the reservation rate quoted to consumers” and that “these practices may violate the law by misrepresenting the price consumers can expect to pay for their hotel rooms.”
Annette Soberats, an FTC staff attorney and the agency’s contact for the hotel operators, says the letter was intended to “send a message to the industry that these fees need to be disclosed up front.
“We decided to narrow our scope to these 22 hotels for the time being, but our message is much broader than that,” Soberats says. “Certainly there are more hotels that hide resort fees. Hopefully, hotels will take the warning and clean up their act.”
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The FTC's Letters to Hotels
The Federal Trade Commission has warned 22 hotel operators that their online reservation sites may violate the law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms.
The warning letters cited consumer complaints that surfaced at a recent conference the FTC held on “drip pricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process. According to the FTC letters, “One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or Internet access, sometimes referred to as "resort fees." These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions.” The warning letters also state that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate. Source: FTC
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