— Johnson Fistel, LLP (@JF_LLP) September 21, 2019
In what have been called ‘landmark’ lawsuits, the Attorneys General for Washington D.C. and Nebraska have filed separate but similar lawsuits this summer against Marriott and Hilton (respectively), accusing the hotel giants of deceptive advertising and use of ‘drip pricing’ to squeeze even more money from American consumers. The suits follow an investigation of hotel industry pricing practices by attorneys general in all 50 states and the District of Columbia, according to the Washington D.C. and Nebraska AGs.
“Resort Fees” is a shorthand expression for all mandatory fees and charges imposed by a hotel on its guests which are not included in the quoted room rate. These add-on charges go by many names (e.g., service fee, amenities fee, destination fee, surcharges, or otherwise), but all too often consumers only realize they are being charged a Resort Fee when it’s too late – at the time of checkout or far along in the online booking process.
The practice is known as drip pricing, because the full price is revealed piecemeal to consumers, making it extremely difficult for them to quickly determine the true cost of a room and compare it with other options. According to the lawsuits, Resort Fee notices are often hidden in “obscure” areas, appear in smaller print, or under misleading headings suggesting they are fees imposed by local governments, for example.
The lawsuits seek to force the hotel giants to advertise the true prices of their hotel rooms upfront, provide monetary relief to the tens of thousands of harmed consumers, and pay civil penalties for their violations of state consumer protection laws.
While the lawsuits have only recently been filed, the deceptive and ubiquitous Resort Fees have been utilized by hotels for years, according to Consumer Reports. In 2012 and 2013, the Federal Trade Commission (FTC) sent warning letters to hotel groups, including Marriott and Hilton, and online travel agencies discouraging the use of drip pricing, as it violated federal consumer protection laws by misrepresenting prices consumers should expect to pay. A follow up report by the FTC’s Bureau of Economics in January 2017 reiterated its earlier findings.
In fact, Consumer Reports recently examined the fee disclosure of the hotels and travel agencies that were sent those FTC warning letters and found that none included the hidden fees in the initial online price shown to consumers. Instead, Consumer Reports found that the hotels and agencies show only the base cost of the room on the initial pricing pages, without including additional mandatory charges, though some mentioned the existence of fees in small print or via a hyperlink. Still, Consumer Reports found that customers must make multiple clicks to arrive at a checkout page to see the total costs, including fees, which is consistent with the allegations in the lawsuits.
A survey by Consumer Reports conducted last year found that about one-third of American adults had been charged a “hidden” hotel fee in the past two years. The hotel industry collected nearly $3 billion in resort and other fees and surcharges in 2018, according to Consumer Reports.
The recent lawsuits filed by the Washington D.C. and Nebraska AGs should be a reminder to all consumers to pay closer attention to their hotel bills and the pricing disclosed throughout the booking process.
For more information or questions about the ‘Resort Fee’ litigation or issues with Resort Fees, please contact the Johnson Fistel, LLP team.