In sending warning letters this week to 22 undisclosed hotel
operators for not fully disclosing on their websites resort fees and other
mandatory surcharges, the Federal Trade Commission aims to convey "a broad
message to the travel industry that any mandatory fees should be included in
the total price quoted to consumers," regardless of booking channel, an
FTC attorney told Business Travel News. While the federal government in recent
years has taken strong actions to establish and enforce full-fare transparency
requirements for airlines, FTC now is toughening its stance on what it calls
"drip pricing" in the hotel sector.
"This is the first time FTC has publicly stated its position
that it is deceptive for the hotels not to include mandatory fees as part of
the total price they quote," according to an FTC spokeswoman.
Its warnings to hoteliers stem from a May conference that
FTC held on drip pricing, which it defines as a practice through which "firms
advertise only part of a product's price and reveal other charges as the
customer goes through the buying process."
"One common complaint consumers raised involved
mandatory fees hotels charge for amenities such as newspapers, use of onsite
exercise or pool facilities, or Internet access, sometimes referred to as 'resort
fees,' " FTC noted in the warning letters sent to hotel operators. "These
mandatory fees can be as high as $30 per night, a sum that could certainly
affect consumer purchasing decisions." Unlike many ancillary airline fees,
such as seating assignments or checked bags, the resort fees or other hotel
surcharges that FTC is targeting are not optional.
During an investigation this year sparked by the May
conference, FTC reviewed "a number of online hotel reservation
sites," determining that at least 22 operators may be in violation of the
law "by misrepresenting the price consumers can expect to pay for their
hotel rooms," according to the FTC letter. "Some hotels exclude
resort fees from the quoted reservation price. Instead, the 'total price' or
'estimated price' quoted to consumers 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. 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."
FTC warned that if those 22 hoteliers do not amend such
practices, then it "may take action to enforce and seek redress for any
violations of the FTC Act as the public interest may require," according
to the letter.
The Business Travel Coalition this week praised FTC's
decision to crack down on drip pricing in the hotel industry, and encouraged the U.S. Department of Transportation to require new airline pricing disclosures of
optional services.