FTC Warns Hotel Chains to Stop Hidden 'Resort Fees,' 'Drip Pricing'

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Resort hotelFrequent travelers know that surprise fees have become the norm. Want a meal on that six-hour cross-country flight? That'll cost extra. Packing a bag for holiday gifts? You'll pay for the privilege.

But unlike airline websites, where it's pretty easy to find out about the fees not included in the flight price, resorts and hotels aren't always so forthcoming.

"Drip pricing," as it's called in the industry, is a common practice among operators of resorts. These extra charges for everything from a fee for a newspaper to towel rentals at a cabana to daily Internet access are often tacked onto the guest's bill without the consumer's knowledge or consent.

According to the Federal Trade Commission's Bureau of Consumer Protection, these charges can run as high as $30 a day.

A Shot Across the Bow

The FTC is now saying that these practices may be breaking the law by "providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms." It's issued a warning letter to 22 hotel operators after complaints lodged against resorts and hotels by customers attending an FTC conference on drip pricing.

The warning letter cites customers who had made reservations far in advance, and only learned of the added charges after arriving at the hotel. Some customers even paid for the accommodations when making the reservation, and were hit with extra fees upon checkout.

A study by the FTC showed that some online reservation websites listed the resort fee separately from the total cost of the room, some listed it after a series of links that led to other pages, and several didn't list the resort fees at all.

Buyer Be Very, Very Wary

Whether the warning letter will cause resorts to change their practices remains to be seen. But you can avoid unpleasant surprises with a few precautionary steps:
  • Always call to confirm a reservation's total price and ask specifically about any resort fees.
  • Re-confirm upon check-in the total price per night.
  • If there are any surprises, ask to speak with a manager, or call the corporate customer service office.
As many hotels belonging to large chains are franchised, fees may vary by location. To skip surprises altogether, look beyond hotels entirely for a more unique experience.




Molly McCluskey is a Motley Fool contributing writer. Follow her on Twitter @MollyEMcCluskey.

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13 Comments

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December 06 2012 at 3:49 PM Report abuse +1 rate up rate down Reply
Hello, WildBill

The hotels in Vegas are particularly bad about this, since Vegas apparently has a "resort" zone. Many people are quite surprised to find out at check-out, after a four- or five-day stay at one of the hotels in the resort zone, that they owe an additional hundred bucks.

December 06 2012 at 12:57 AM Report abuse +1 rate up rate down Reply
1 reply to Hello, WildBill's comment
JC

It's not so much a "zone" in Las Vegas as it is who the parent company is. The Cearsr's/Harrah's properties don't charge a resort fee. Have a look at Caesar's Palace, Flamingo, the Quad, Harrah's, Paris, Bally's, and the Rio. MGM properties like the MGM Grand, Excalibur, Mandalay Bay, Luxor, New York New York, and Monte Carlo charge a resort fee. So does the Tropicana, Hooter's, and sometimes the Stratosphere. I've also found that during midweek they'll often waive the fee if you use the direct reservation line. If faced with losing you to another property, they'll usually do it. It doesn't work as well on weekends.

December 06 2012 at 12:05 PM Report abuse +1 rate up rate down Reply
condocaine

its about time,,, also about time the pendulum swings the other way towards the consumer and away from the corporation!

December 05 2012 at 9:54 PM Report abuse +1 rate up rate down Reply
Hello Tony

Resort fees suck I booked a room that was supposed to be $25 and was charged $25 a night in resort fees without being told before booking.

December 05 2012 at 8:15 PM Report abuse rate up rate down Reply
maa2626

yea, let the feds "do something about it" take action and do it yourself. why expect someone else to look after you?

December 05 2012 at 7:10 PM Report abuse rate up rate down Reply
maa2626

good grief, pay the charges with your credit card, then contest the charges. no need to involve anyone else.

December 05 2012 at 7:08 PM Report abuse -1 rate up rate down Reply
Frank

I've seen a number of hotels actually advertise (on line at least) that they do not charge resort fees. Many hotels also try to get you with parking fee's which can get hefty depending on the length of stay. We have found that booking directly with the hotel often gets you similar, if not better rates, and gives you an opportunity to negotiate. Ask questions and make notes of the hotel staff names/answers. In the end, its buyer beware.

December 05 2012 at 6:32 PM Report abuse +1 rate up rate down Reply
1 reply to Frank's comment
JC

"No Resort Fees" is a big selling point for many of the Las Vegas properties.

December 06 2012 at 12:06 PM Report abuse rate up rate down Reply
Taina

Good news.

December 05 2012 at 6:10 PM Report abuse rate up rate down Reply
JC

I've found that, quite often, if you call the reservation number direct and tell them that you want to make a reservation but won't pay the resort fee, they'll go for it.

December 05 2012 at 3:34 PM Report abuse +1 rate up rate down Reply
Trader X Trader

This has been going on forever. It is nice to finally see that something should be done about it.

If a "resort fee" is not optional, then the hotel HAS to include that in the price of the room. To not do that is purposely misleading and false advertising. Any fees that are mandatory should be quoted in the room price.

The separation of fees is just a competitive way of trying to mislead customers by making the price appear cheaper than it really is.

Imagine if an airline sold seats from LA to NY for $50.00, but then at the airport upon checkin they tacked on a $200.00 mandatory "seat fee"? How long would they be allowed to continue doing this before it was put to an abrupt end ...

December 05 2012 at 3:02 PM Report abuse +1 rate up rate down Reply
1 reply to Trader X Trader's comment
Thomas

"If a "resort fee" is not optional, then the hotel HAS to include that in the price of the room...."

Not true at all. As a hotel manager/executive for almost 30 years (20 with Marriott Hotels) I can speak from experience. There are almost no laws governing how we advertise or apply rates. I'm not advocating deceptive practices, just letting you know that the resorts are not violating the law. As a traveler myself, I don't like hidden fees and am quick to tell a hotel that I'm not paying for the automatic $2 in-room safe fee when I don't even use it. Most branded hotels will quickly remove disputed fees because they can ill afford to lose a customer. Resorts are even quicker to resolve disputes because their share of the travel market is much smaller. And calls to customer service costs them money for the call and points on their next inspection. Bottom line, caveat emptor, let the buyer beware. When you book a reservation, ask clearly, "What other charges or fees will I have to pay at your hotel?" NOW they have to divulge any other fees you may have to pay. Also, send the hotel an e-mail after booking and briefly outline your conversation with "Wendy" and ask them for a reply acknowledging the information. Blindly making a reservation for a $69.95 room and ending up finding a $500 charge on your credit card will leave a bad taste in anyone's mouth.

TK

December 05 2012 at 11:29 PM Report abuse rate up rate down Reply