When it comes to making hotel reservations, some consumers aren’t feeling very hospitable about drip pricing — the practice of advertising only part of the price and then revealing other charges later as the customer goes through the buying process. That’s why FTC staff sent out 22 warning letters to companies raising concerns about the practice.
Earlier this year, the FTC sponsored a conference on drip pricing and asked people to share their stories. And boy, did they. One common complaint was that some hotels imposed mandatory charges for things like newspapers, use of the pool or gym, or internet access — sometimes called “resort fees.” Consumers said they didn’t know they’d have to pay these fees in addition to the quoted hotel rate. Several said they found out about the mandatory charges when they checked in. Others paid for the room in advance only to get hit up for the additional fee — as much as $30 — after they arrived. (Remember, we’re not talking about room service or spa treatments here. These are mandatory charges imposed regardless of whether a customer actually uses the service.)
So FTC staff did their own review and found the same thing. Some hotels quoted a lower “total price” or “estimated price” that included only the room charge and applicable taxes, but left out the mandatory fees. On some sites, the resort fee was listed nearby, but separate from, the quoted price. On others, consumers who spotted an asterisk could follow it to a “disclosure” of the charges — sometimes on the same page and sometimes not, but usually in fine print. A few sites said nothing aside from a pro forma statement that other fees may apply.
The FTC letters warn companies that they may be violating the law by misrepresenting how much consumers can expect to pay for their rooms. The staff’s advice:
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 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.
The letters end with a friendly reminder that “the FTC may take action to enforce and seek redress for any violations of the FTC Act as the public interest may require.”
The important take-away point for advertisers: One way to encourage customer goodwill (and minimize the risk of a law enforcement tussle) is to be clear about costs from the get-go.
A tip for business travelers: Contact hotels directly to ask about mandatory charges. If one hotel’s resort fee leads you to choose a competitor, let them both know what motivated your decision.