Legal Analysis: FTC Has Authority, Record for Enforcement Action on Mandatory Resort Fees
Travelers United released a legal brief today outlining the rationale for FTC action to end the growing practice of hotels charging required fees that are not included in the advertised nightly rate. Hotels often charge all guests fees for amenities such as a pool, newspapers, wi-fi in the lobby and even the water provided in a room.
The following is an overview of the 9-page paper, which is available for download here: View the Brief
Hotel operators that do not include mandatory “resort fees” in the advertised room price misleadingly make the price of rooms appear less expensive than they actually are to consumers. This growing practice violates Section 5 of the Federal Trade Commission Act, which prohibits “unfair or deceptive acts or practices in or affecting commerce.” Although the FTC has expressed concern over resort fees, and issued warning letters to hotel operators in 2012, it has not any taken significant enforcement action to halt to this practice. The FTC should exercise its authority under Section 5 of the FTC Act to eliminate this deceptive and unfair practice altogether.
The charging of mandatory “resort fees” by hotels results in a misrepresentation of the true price of the hotel room, a drip pricing practice that is harmful to consumers and undermines fair competition. The FTC should exercise its authority under Section 5 of the FTC Act to eliminate this deceptive and unfair practice and require hotels to include mandatory fees in the base price or room rate.
- In 2012, the FTC sent letters to 22 hotels warning that charging all guests mandatory resort fees in addition to advertised nightly rates is misleading.
- The FTC said mandatory resort fees may violate Section 5 of the FTC Act, which bans deceptive acts or practices in commerce.
- Hotels and resorts collected $2.25 billion in surcharges and fees in 2014, according to an New York University study.
- These local operators often attribute the mandatory fees to amenities such as use of a pool, ‘free’ coffee and newspapers, and even water provided in the room.
- Travelers United, a non-profit with 23,000 members, launched EndHotelAndResortFees.org last week to convince the FTC to take action.