FTC Proposes Legislation Against Hidden Resort Fees


Federal Trade Commission chairperson Edith Ramirez has called for new federal legislation to combat the hotel industry's imposition of hidden resort fees, according to the Los Angeles Times. In a recent letter to 10 U.S. congressional representatives, Ramirez called the charges a "deceptive and unfair trade practice" and suggested it was time for Congress to prohibit such fees.

Increased hotel demand over the holidays and a resulting rise in consumer complaints have put a fresh spotlight on mandatory resort fees that do not appear on advertised hotel rates, according to the Times. But the issue was gaining traction before the holidays. A poll last year of 1,100 registered voters by Arlington, Va.-based Travelers United, a nonprofit consumer advocacy group with 23,000 members, found that the hidden charges were on the rise, with nearly 200 hotels in California alone levying an average unannounced fee of $17 per night, per room. Travelers United contends the fees are unfair because they do not appear on advertised rates, and most hotel guests do not see the charge until they receive their bill at checkout.

In 2015, U.S. hotels were projected to make a record $2.47 billion from all fees and surcharges, according to a study by New York University's Tisch Center for Hospitality and Tourism.

Ramirez directed her letter to members of Congress who have spoken out against the fees, including senators Bob Casey (D-Pa.), Chuck Grassley (R-Iowa) and Claire McCaskill (D-Mo.). Currently, the FTC looks into complaints about the fees on a case-by-case basis and has notified offending hotels that their hidden fees might "violate the law."

In her letter, chairperson Ramirez noted that her agency has warned individual hotels to make sure that previously hidden fees are displayed prominently and early in the booking process, but that "the most efficient and effective means" to combat the charges "would be through legislation."

It is not the first time the FTC has tackled hidden resort fees. In 2012, the agency warned 22 hotel operators that their online reservation sites might have been in violation of  the law by providing a deceptively low estimate of what consumers could expect to pay for their hotel rooms. Then-chairperson Jon Leibowitz cited consumer complaints that had surfaced at an FTC conference on "drip pricing," a technique in which firms advertise only part of their product's price and reveal other charges at a later date as the customer goes through the buying process.

According to the FTC's 2012 warning, "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.' These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions." The notice also stated that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.

"Consumers are entitled to know in advance the total cost of their hotel stays," added Leibowitz in 2012. "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."