LA Times: FTC Warns About ‘Drip Pricing’. Are Resort Fees Coming to an End?

Hotel resort fees may soon be coming to an end.  The LA Times is reporting that the Federal Trade Commission has warned 22 hotel operators that adding fees (such as resort fees) might violate the law.

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From the LA Times:

In May, the FTC hosted a conference on what it calls “drip pricing,” which it 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.”

Sound familiar? Kevin Mitchell, chairman of the Business Travel Coalition; Charlie Leocha, executive director of the Consumer Travel Alliance; and Ed Perkins, a longtime consumer advocate, think it does. In an August letter to the FTC, the three wrote: “Mandatory artificial fees … can make a hotel’s posted rate appear to be below the true price by as much as $30 a night — more than enough to drive consumer choices in the travel marketplace.” They noted that the practice makes it difficult to determine how much your final bill will be, which hurts leisure and business travelers who must be attentive to the bottom line.

While non-mandatory fees such as parking charges appear to be acceptable, mandatory fees such as resort fees ‘might’ violate the law.  From the article:

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WSJ Catches Hotels Piling on Fees

wall-street-journal-logoIn a new article posted on the Wall Street Journal’s website, the author catches hotels piling on extra fees to make up for a loss in room revenue.  Some of the fees that they have found are mandatory valet parking fees, increased resort fees, housekeeping and bellman mandatory gratuities, and other fees such as a mandatory fee for in room safes. 

Should you be adding fees like these to make up for a loss in room revenues?  Absolutely not. 

First off, mandatory fees are often illegal.  The article describes how Wyndham Worldwide and Marriott were sued and settled with the Florida’s Attorney General over adding mandatory surcharges.  The Florida AG aslo has six ongoing investigations.  Undisclosed energy surcharges (we all remember those) and in-room safe fees are among the issues being investigated. 

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Hotel ‘Hidden Charges’ Under Attack This Summer

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Maybe it is just a sign of the weakening economy, but the major news outlets are attacking hotel hidden charges this summer.Just last week, I saw two different morning news channels run pieces on how to avoid hidden hotel fees.  This article has appeared in the main section on MSN as well.

Hotels have been notorious for high fees since the beginning of time.  Who doesn’t know that picking up a phone in the hotel room is disastrous for your wallet?  I remember once staying at a resort and calling to reserve a time to go horseback riding.  The hotel charged over $18 for the 2 minute phone call…. and the horse stable was on the resort’s property!

How badly do these ‘hidden fees’ impact your guest service?  More than you can imagine.  The $18 phone call was almost 10 years ago and I am still a bit bitter today.  The real reason for my anger was that not only was I taken for $18 but then I was insulted when I asked about the fee at check out.  The snobby GSA responded with ‘phone calls come at a real premium at the resort.’

Charges for parking, internet access, phone calls and resort fees are part of hotel life.  How can your hotel charge the fees without hurting guest service?

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