FTC To Consider Ban On Hotel Resort Fees

by Jessica Montevago

The Federal Trade Commission is said to be reconsidering its position on hotel resort fees. 

The FTC may soon require that hotels include these mandatory fees, which supposedly cover extra amenities like access to fitness centers or parking lots, in the initial price they quote, rather than waiting until checkout, the Washington Post reported, citing multiple sources.

In 2012, the FTC ruled hotels could add on surcharges to room rates, as long as they were disclosed before booking was complete. Since then, resorts across the nation—and especially in tourist hot spots like Orlando and Las Vegas—have been tacking on fees ranging from $15 to $85. The fees do not show up in the initial search for hotel room prices, and are not commissionable to travel agents.

A study by New York University’s Tisch Center for Hospitality and Tourism found that in 2015, U.S. hotels collected $2.47 billion in fees and surcharges. In the first six months of 2016 alone, resort fees have jumped 8% to an average of $19.52 a night.

Earlier this year, advocates took the issue to Washington. Sen. Claire McCaskill (D-MO) introduced legislation that would prohibit hotels from advertising a room rate that doesn’t include all mandatory fees, and Rep. Suzan DelBene (D-WA) officially asked the FTC to review its decision, saying the fees violate Section 5 of the Federal Trade Commission Act.

Many typical internet clients actually turn to agents for their knowledge about resort fees.

Consumer advocates have long argued that the practice is unfair and deceptive. But hotels have become increasingly effective at disclosing the fees to guests.

“It sounds offensive because [resort fees] are called ‘surprising’ or ‘hidden,’ but if you were to call a resort they’ll be quick to tell you,” said Bjorn Hansen, clinical professor at the New York University Preston Robert Tisch Center for Hospitality and Tourism.

If the FTC does rule against resort fees, the industry will need to find other ways to make up that revenue. “It could cost the consumer even more,” Hanson said, as hotels will have to add the fees directly to the room rate, and then charge municipal occupancy taxes.

Jamie Mussolini, founder and president of Beachfronts Travel LLC in Westchester, NY, said she has seen resort fees as high as $75. “Some clients feel they’re not getting the full value of the cost of that fee because they might not use the fitness facilities or business centers,” she said; often they choose to book lower-priced properties instead, or those with no fees.

Indeed, 80% of respondents polled by The American Hotel & Lodging Association said they were prepared to pay resort fees if the amenities were deemed "worth it," and more than half of the 1,000 travelers surveyed said they would rather see the fee listed separately than as a lump-sum price for the room.

Sometimes, the very complexity of resort fees works to the benefit of travel agents, Mussolini said.  “Many typical internet clients actually turn to agents for their knowledge about resort fees,” she noted. “I have many new clients who come to me and are nervous to book on websites because they’re afraid of being charged additional fees upon arrival.”

And of course hotels are not the only sector of the travel industry to play games with fees; the airlines are guilty as well.

“Are we going to start saying airlines can’t charge for extra bags? In the end, it’s the consumer’s decision to stay at a resort,” Hanson said.

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