FTC Warns Hotels on Hidden Fees

“Hidden fees” in the airline industry has been a hot-button issue for several years. Now the federal government has broadened its inquiry into hidden fees in the hotel industry.

The Federal Trade Commission warned 22 hotels that they may be violating the law if they do not include mandatory fees and surcharges in their price quotes.

Unfair business practice
The FTC considers so-called “drip pricing” – a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process – a deceptive and unfair business practice.

A common complaint, the FTC said, concerns the mandatory “resort fee” charged by many hotels that cover the use of swimming pools, exercise rooms and other services regardless of whether they are used.

Those charges can add as much as $30 a night to a room’s cost, a sum that could affect a customer’s purchasing decision, the FTC said.

Resort fees excluded from quote
In its warning letter, the FTC said it reviewed a number of online hotel reservation sites and confirmed that some hotels exclude resort fees from the quoted reservation price, citing a “total price” or “estimated price” that includes only the room rate and applicable taxes.

“At some of these sites, the applicable resort fee is listed nearby, but separate from, the quoted price,” the letter said. “In others, the quoted price is accompanied by an asterisk that leads consumers to another location at the site – sometimes on the same page, sometimes not – where the applicable resort fee is disclosed, typically in fine print. A few sites fail to identify applicable resort fees anywhere, and instead inform consumers that other undefined fees may apply.

The FTC told Travel Market Report that the letters were sent to individual hotel properties, many of which were part of large chains.

“The FTC’s hope is that others in the travel industry such as online travel sites take note of our position on mandatory fees being included in total cost quotes,” the agency said.

GDS programs
The major GDS companies have “total pricing” or “transparent pricing” programs that are popular but voluntary among hotels.

A Sabre spokeswoman said that “if a hotel participates in Hotel Total Pricing, the price quote that the agent sees will include resort fees if there is one.” She said more than 90% of hotels in the Sabre GDS participate in the program.