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.
In May, the FTC hosted a conference on “drip pricing,” in which 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, 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. I think it also will be good for so many hotel employees, who will now not have guests be surprised, as they seem to be so frequently.”
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, a spokeswoman for the property. She says that Hatch was shown an all-inclusive rate online before booking, in accordance with the FTC guidelines.
The West Street’s Web site shows the full charge after a basic room rate has been selected.
The FTC action stops short of what the Transportation Department did this year for airfares, requiring 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 entitling 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. “As far as I can tell, they’re complying with what the FTC asked.”
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 wouldn’t say which ones had been 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. Joe McInerney, the association’s president, says that “misunderstandings” aren’t necessarily caused by resort fees but often by online travel agencies that display a rate that doesn’t include the fees. He says that his association doesn’t set standards on the acceptability of charging a resort fee.
The FTC warning has been referred to the group’s attorneys, McInerney says. “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. Of the major American hotel chains that I contacted, only Marriott, which owns the Courtyard, Renaissance and Ritz-Carlton brands, said that it had been warned. But a company spokesman says that Marriott is already following the law. “We do disclose fees before the booking is completed,” says John Wolf, a Marriott spokesman. “We believe we are in compliance.”
Gary Cohen begs to differ. He says that he was surprised when Ritz-Carlton tacked a $25 resort fee to a recent $600-a-night rate. The amenities should have been included in the room price, he says, 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.”
What’s going on here? Hotels want to quote a low base rate to entice guests to book their rooms, while travelers just want to know the total cost from the start.
For now, it appears that the FTC will allow hotels and online agencies to continue displaying an artificially low price, as long as they reveal the full rate at some point before a purchase is made. But the FTC is just getting started, and the government can tighten its requirements or force the industry to change the way it displays prices through a series of enforcement actions or lawsuits as it tries 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 says that Ritz-Carlton never responded to his grievance, but Hatch’s resort fee in Bar Harbor was stricken from her bill.
Maybe the FTC’s actions haven’t killed mandatory resort fees. In fact, no matter where or how the fees are disclosed, NYU’s Hanson says, they’ll continue to exist because they allow a hotel to avoid paying certain taxes on them. But “gotcha” resort fees as we know them in the United States may be mortally wounded.