by Michael J. Shapiro | January 01, 2013
The Federal Trade Commission sent a strongly worded letter in late November to 22 hotel operators, warning that their sites might violate the law by providing a deceptively low estimate of room rates. At issue were mandatory surcharges such as resort fees that do not clearly appear in price quotes.

According to the letter, consumers have complained to the FTC that they did not know they would be required to pay mandatory fees for amenities such as newspapers, exercise or pool facilities, or Internet access -- often referred to as "resort fees" -- in addition to the room rate and taxes. "The mandatory fees can be as high as $30 per night," the letter reads, "a sum that could certainly affect consumer pricing decisions."

In fact, such charges can run as high as $60 at high-end resorts, according to M&C's March 2012 cover story on the controversial issue of resort fees.

After reviewing a number of reservation sites, the FTC concluded that some hotels are, indeed, misrepresenting their rates by hiding resort fees or not identifying them at all. The hotel operators in question, which have not been named, were advised that the FTC "may take action to enforce and seek redress for any violations of the FTC Act."  

As of press time, the FTC had heard back from some of the 22 hotel operators. "We're just trying to get a sense of their time frame in actually making the changes that we believe are necessary -- that is, including all the mandatory fees in the total price," said FTC Bureau of Consumer Protection staff attorney Annette Soberats. "Right now we're just working with them and hoping that they'll be cooperative."

Ancillary fees and surcharges have been quite lucrative for the hospitality industry over the past several years. U.S. hotels were expected to collect about $1.95 billion in fees for 2012, according to an August 2012 report by Dr. Bjorn Hanson, dean of the Tisch Center for Hospitality, Tourism and Sports Management at New York University. Resort fees account for significantly less than half of that total, Hanson estimated, and he does not expect the FTC's investigation to affect the prevalence of the charges.

"I think there will be much more disclosure about the fees," Hanson predicted, "and that's good for the industry because consumers will be more informed. I don't think the fees have been hidden or secret or surprise. There's been a burden on the consumer to find them, but I never believed that these were meant to defraud consumers." Hanson added, "I do think it has been complicated, in an area where consumers didn't expect things to be complicated."