"FTC investigations are non-public, so I can’t confirm or deny the existence of an investigation," says Mitchell J. Katz of the FTC’s Office of Public Affairs. The technical term, incidentally, for resort fees is "drip pricing," which the FTC defines as "a pricing technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process. The additional charges can be mandatory charges, such as hotel resort fees, or fees for optional upgrades and add-ons."
Back on Nov. 28, 2012, the FTC warned 22 hoteliers that they might be operating outside the law "by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms" and "strongly encourage[d]" them to cease and desist. "So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers," said then-FTC Chairman Jon Leibowitz. (They’re also a $2.1 billion a year business and growing, with a profit margin of 80% to 90%, according to the Preston Robert Tisch Center for Hospitality, Tourism & Sports Management at New York University.)
In addition, the FTC issued a letter that read, in part, "These practices may violate the law by misrepresenting the price consumers can expect to pay for their hotel rooms. We believe that online hotel reservation sites should include in the quoted total price any unavoidable and mandatory fees, such as resort fees, that consumers will be charged to stay at the hotel. While a hotel reservation site may breakdown [sic] the components of the reservation estimate (e.g., room rate, estimated taxes, and any mandatory, unavoidable fees), the most prominent figure for consumers should be the total inclusive estimate."
What should NOT be done is: "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." (According to NYU’s Bjorn Hanson, if the proliferation of resort fees appears to be slowing down, it’s because the hotel industry has added so many already.)
"This is the first time the 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," FTC spokeswoman Betsy Lordan told CNN. "We want to give the hotel operators an opportunity to come into compliance voluntarily before naming them publicly." So far none of the 22 recipients has been named. Aside from threatening a public shaming, the FTC appears to be sticking to the policy initially outlined by staff attorney Annette Soberats: "At this time, we’d like to work with them privately so they cooperate with us and make the changes we believe are necessary."
You are encouraged to contact the FTC should you encounter any hidden fees during a hotel stay … a good idea, as some hoteliers appear still not to have taken the hint. A January column in USA Today by Christopher Elliott chronicled the aggravating saga of Cheryl Nygaard. While checking out of the Doubletree San Juan, in Puerto Rico, Nygaard was hit with previously undisclosed fees that added 18% to her bill. "Hilton apologized for Nygaard's confusion, saying the company makes every effort to ensure that all mandatory fees for hotels in its system are disclosed," Elliott reported. Hoteliers blame much of the ill-will on third-party booking sites, which they accuse of leaving resort fees and other add-ons undisclosed.
Some aren’t buying that. "I think owners are calling the shots and are probably willing to take a chance to get the additional revenue until they are mandated to disclose and until this goes to court," conference consultant Joan Eisenstodt told MeetingsFocus.com.
The FTC doesn’t think so. "Given the positive response from those who received letters, we think that the warning letter is sufficient," Soberats said in April 2013. From the sound of it, I wouldn’t expect further federal action anytime soon.
