Room Rates That Exclude Fees Are Deceptive, FTC Has Warned

Tuesday, June 23, 2015 marks the beginning of a TravelersUnited.org campaign to end a deceptive and growing trend in hotel and resorts that advertise nightly rates without including mandatory fees. Local operators often advertise a nightly rate per room, but don’t clearly indicate until guests arrive or receive their final bills that they have to pay a mandatory ‘resort fee’ that ranges from $20-35 for hotels, and often more than $75 per night at a resort.

If a hotel charges a mandatory fee, it should be included the nightly room rate. Failing to do so deceives about the true cost of the room and undermines the power to comparison shop. Too often consumers are surprised at check out when hotels demand sometimes hundreds of additional dollars in sneaky “resort fees.” It’s deceptive, unfair, and wrong.

The Federal Trade Commission has the power to stop this practice. Attorneys General also can take action. In both cases, authorities are empowered to file suit against companies that use deceptive practices to harm consumers, and upend competition that drives down prices and improves service for consumers.

Mandatory fees are on the rise. Hotel and resort fees were estimated to grow to $2.25 billion in 2014, a 7.1 percent increase from $2.1 billion in 2013, according to a study by NYU School of Professional Studies professor Bjorn Hanson.

But really, what’s the impact? The pricetag for these mandatory fees can add up to the cost of tickets to Disneyworld with their children or a pair of roundtrip plane tickets for a weekend getaway on their anniversary. For a business with a ten person sales team that spends 10 nights per month each in hotels, a $25/night mandatory fee adds up to $30,000 in unexpected costs over a year.

So, who can stop these mandatory fees?  In 2012, the FTC issued warning letters to 22 hotels that were not clearly disclosing these fees. Attorneys General also have authority to act to protect consumers when businesses engage in deceptive advertising. Congress also plays an important role in setting policy to protect consumers and ensure that businesses engage in fair practices and transparent pricing. Only with full information can competitive forces drive down prices and improve services for consumers.

North Carolina’s Attorney General Investigates Mandatory, Hidden Fees

The Ritz Carlton in Charlotte instituted a surcharge on customers at its restaurant and lounge during the NCAA basketball tournament of the Central Intercollegiate Athletic Association, the oldest athletic conference representing historically black colleges and universities (HBCU). Only, the hotel never told guests clearly.

North Carolina Attorney General Roy Cooper has instructed his Department of Consumer Affairs to investigate these fees, and has been outspoken in his criticism of them. Months after this March Madness occurrence, the Ritz Carlton recently said, “”We would like to apologize to any guests we may have offended by the addition of a service charge we implemented at a recent event in our lobby lounge. The service charge was not intended to single out any particular group or organization and we deeply regret any misunderstanding this may have caused.”

Join The Fight to End Hotel and Resort Fees

Stand with TravelersUnited.org and against mandatory hotel fees and deceptive advertising of nightly rates that do not include those fees. To take action, file a complaint, ask for help, contact a state attorney general or Congress, click here.