After Jane Hatch selected the room rate she wanted at the West Street Hotel in Bar Harbor, Maine, the hotel Web site delivered an unpleasant surprise on the next screen: The quoted price hadn’t included a $25-per-day “resort and club fee” that gave Hatch access to the hotel pool, hot tub and fitness center — whether she wanted it or not.
“They didn’t tell me until the end,” says Hatch, who lives in Montgomery Village, Md. “I still booked the room, but it was misleading and unbecoming, particularly for a new property looking to make its mark. Perhaps they don’t care in resort areas like Bar Harbor. But I care.”
So does the Federal Trade Commission. In a surprise move, the consumer protection agency recently warned 22 hotel operators that their online reservation sites may violate the law by displaying a “deceptively low” estimate of what consumers can expect to pay.
A victory for consumer transparency
In May, the FTC hosted a conference on “drip pricing.” Companies advertise only part of a product’s price and reveal other charges later as you go through the buying process. The FTC has received many consumer complaints about hotel resort fees, and this fall, several consumer advocates wrote a letter to the agency, asking it to crack down on them.
“This is good news for consumers,” says Bjorn Hanson. He is the dean of New York University’s Center for Hospitality, Tourism and Sports Management. “It will eliminate some of the disappointment and frustration they have when they haven’t been aware that there will be resort fees. It will also benefit many hotel employees, who will now avoid frequently encountering surprised guests.”
A representative of the West Street Hotel defends the property’s mandatory fee, calling it a “terrific value.”
“The feedback from guests over the summer, which was the first season for the new hotel, was largely in favor and agreement about the value of the fee,” adds Jennifer Cuomo. She is a spokeswoman for the property. She says that Hatch was shown an all-inclusive rate online before booking, in accordance with the FTC guidelines.
Consumer advocates push for further action
The West Street’s website displays the full charge after a basic room rate has been selected.
The FTC’s action falls short of what the Transportation Department did this year for airfares. It requires airlines and online agencies to display an “all-in” fare that includes every mandatory charge up front. Consumer advocates remain hopeful that the warning could translate into enforcement actions. It entitles shoppers to see the full price initially when they ask for a price quote, and not at the end of the booking process, when many have already decided to reserve the room.
Ed Perkins, one of the leading voices against resort fees (and, by way of full disclosure, a columnist for Tribune Media Services, which syndicates one of my columns), calls the FTC’s warning a “partial victory.”
“Apparently, at least some hotels are being careful to note the fees immediately, and they’re also noting the fees in what they post to online travel agencies such as Expedia,” he says.
A closer look at compliance
But as of late last week, it remained unclear whether any hotels that had received the warning had taken action to comply with it. The FTC didn’t disclose which ones it had cautioned. I asked most of the major hotel chains whether they’d seen the letter, and I received a variety of responses.
Hilton referred all questions to the American Hotel & Lodging Association, the trade association for the U.S. hotel industry. The association’s president, Joe McInerney, states that “misunderstandings” are not necessarily caused by resort fees but often result from online travel agencies that display a rate without including the fees. He says that his association doesn’t set standards on the acceptability of charging a resort fee.
McInerney says that the FTC warning has been referred to the group’s attorneys. “We’ll probably send out an advisory to our members soon.”
Other hotel companies either didn’t respond to my questions or said that they hadn’t received the FTC letter.
I contacted major American hotel chains, and only Marriott, which owns the Courtyard, Renaissance, and Ritz-Carlton brands, acknowledged receiving the warning. But a company spokesman says that Marriott is already following the law. John Wolf, a Marriott spokesman, says, “We disclose fees before the booking is completed. “We believe we are in compliance.”
Gary Cohen begs to differ. He expressed surprise when Ritz-Carlton added a $25 resort fee to a recent $600-a-night rate. He believes the amenities should have been included in the room price, not separated as a mandatory fee. “Do you really need to nickel-and-dime your guests another $25?” asks Cohen, the president of a health food company in Sacramento. “I guess in the case of the Ritz, the answer is yes.” (Related: How to avoid hidden hotel fees on your next trip.)
The tug of war between hotels and consumers
What’s going on here? Hotels want to quote a low base rate to entice guests to book their rooms. Travelers just want to know the total cost from the start. (Here’s how to book the best hotel at the most affordable rate.)
For now, it seems that the FTC will permit hotels and online agencies to continue displaying an artificially low price. They must disclose the full rate before a purchase is made. However, the FTC is just beginning, and the government can enhance its requirements or compel the industry to change the way it displays prices through a series of enforcement actions or lawsuits in an effort to address the problem of drip pricing.
In the meantime, customers who find a mysterious resort fee at the end of a booking path can do what Cohen and Hatch did: complain. Cohen states that Ritz-Carlton never responded to his grievance, but they removed Hatch’s resort fee in Bar Harbor from her bill.
Maybe the FTC’s actions haven’t killed mandatory resort fees. In fact, according to NYU’s Hanson, regardless of where or how the fees are disclosed, they will persist because they enable a hotel to avoid paying certain taxes. However, “gotcha” resort fees, as we know them in the United States, may be mortally wounded.However, “gotcha” resort fees, as we know them in the United States, may be mortally wounded.
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