The quoted rate for an “amazing” three-bedroom condominium in Coeur d’Alene, Idaho, looked too good to be true. The unit, which featured flat-screen TVs, beds with “lush, warm comforters,” a gourmet kitchen and a lanai overlooking Lake Pend Oreille, cost only $1,900 for the month.
And guess what? It was too good to be true.
Buried in the fine print, I found a notice about a “guest service fee” of $30 per night charged for all stays. “This will show up as an additional charge on all reservations,” the rental agent’s website warned me. And then, another surprise emailed to me by the agent: “Please note that the quotes given do not include utilities.”
How much was the actual cost? After factoring in rent, housekeeping and all taxes and fees, it would have cost $4,494 — more than double the initial rate.
The practice of quoting an initial, low rate and then adding taxes, fees and other charges is called “drip pricing.” It’s a strategy most commonly associated with large hotels, with their mandatory “resort” fees, and airlines, which charge extra for luggage and seat assignments. But increasingly, other parts of the travel industry are turning to drip pricing to make an extra buck. You may be surprised where you’ll find it.
Is it too good to be true?
I was. The Coeur d’Alene rental fees caught me off guard. My family spends months at a time on the road, and we wanted to see Idaho in the fall. My exchanges with the rental company were polite, but frustrating. I spotted the fine-print warnings and asked for an “all in” price. After recovering from sticker shock, I asked if they had a less expensive unit.
The response: silence.
Travelers are wired to hate this kind of pricing, says Prince Ghuman, a researcher and professor of neuromarketing at Hult International Business School in San Francisco. He says our brains set an expectation based on the initial (too good to be true) number.
“When travel businesses show a lower price, the brain uses this number as an anchor of expectation,” he says. “When this expectation is violated with surprise fees, it hurts the business.”
Drip pricing is already illegal elsewhere. In Australia, businesses must “clearly” disclose a full price at the beginning of the online purchasing process. Consumers can report violations to the Australian Competition and Consumer Commission, the country’s consumer-protection and competition agency, which can lead to enforcement action. The U.S. Federal Trade Commission (FTC) looked into drip pricing in 2012, but stopped short of requiring businesses to quote an all-in price up front.
Mandatory hotel charges continue to climb. Resort fees are up 11 percent for the year, to an average of $21 per night, according to ResortFeeChecker.com, a site that tracks resort fees. “Las Vegas, for example, is one of the most expensive cities for resort fees,” says the site’s editor, Randy Greencorn. “The average resort fee in Las Vegas is almost $30 per night, with many hotels charging $45 or more.”
When it comes to pricing, timeshares are an almost constant source of complaints.
Lisa Ann Schreier, the Orlando-based author of “Timeshare Vacations for Dummies,” says one “gotcha” is the cleaning fee, usually between $50 and $200 for the duration of your visit.
“If you’re renting a timeshare either from an individual owner or the resort itself, know that the vast majority of timeshare resorts do not offer a full daily cleaning at no charge,” she says.
As I write this, I’m staying in a vacation rental in Sedona, Ariz., with a nonrefundable cleaning fee of $375 per month, which seems a little high. A month-long rental in Fort Collins, Colo., in June didn’t have a cleaning fee, although I spent the morning of my checkout cleaning to show my gratitude.
Kathy McCabe, also a frequent vacation renter, suggests that the cleaning fees are a hidden price increase. “You might book a two-night stay and cleaning is $100,” says McCabe, who publishes a magazine about travel to Italy. “So it’s not exactly the price you were originally looking at.”
Also, if you’ve signed up for a promotional package offering a cheap stay, a discounted show, or cut-rate theme park tickets in exchange for your attendance at a timeshare sales pitch, make sure you go.
“If you don’t attend or fail to complete the sales pitch, you’re very likely looking at paying a very steep penalty, which in most cases will be more than what you could have booked the stay for yourself,” Schreier says.
Drip pricing is spilling into all areas of the travel industry
Restaurants are playing the game, too. I recently reported on the rise of mandatory tips, which can raise your bill by 18 percent or more.
A vacation rental site such as Airbnb.com will show you a grand total before you book, but by the time you arrive at the final booking screen, you’ve probably already made the purchasing decision. And, although that wait-until-the-end approach may be legal, it is also deceptive for some travelers. I certainly consider myself in that group.
There’s only one takeaway for travelers. Drip pricing is spilling into the rest of the travel industry. You have to watch for it, whether you’re checking into a vacation rental, booking a timeshare week or dining in a restaurant. If you encounter this kind of deceptive pricing, and if it’s possible, take your business elsewhere.