FTC Says Hotel Resort Fees May be 'Deceptive'

Nov. 29, 2012 — -- The Federal Trade Commission issued a warning to 22 hotel operators that they may be breaking the law by misrepresenting the cost of a hotel stay by hiding mandatory surcharges including "resort fees."

The FTC said it reviewed a number of hotel reservation sites but did not identify which companies it warned. It found that some hotels exclude what are commonly referred to as resort fees from the quoted reservation price, for amenities like newspapers, exercise facilities or internet access. These fees can be as high as $30 a night or more.

The Palace Station Courtyard in Las Vegas has a resort fee of $14.99 per night which increased one traveler's hotel bill by more than 50 percent, USA Today reported.

The hotels were warned that the FTC may take action to enforce and seek redress for any violations of the FTC Act.

Betsy Lordan, spokeswoman for the FTC, said this was the first time the agency 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.

Lordan said it did not reveal the names of the 22 hotel operators to give them an opportunity to come into compliance voluntarily before naming them publicly.

"Consumers are entitled to know in advance the total cost of their hotel stays," said Federal Trade Commission Chairman Jon Leibowitz in a statement. "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."

The FTC has previously warned about "drip pricing," described as a technique in which firms advertise part of a product's price and reveal other charges when the customer completes the transaction. One common complaint involves mandatory fees that hotels sometimes list nearby but separate from the quoted price on their websites, the commission said. Sometimes a quoted price is accompanied by an asterisk that leads to another part of the hotel's website. Other websites fail to identify applicable resort fees and instead inform consumers that other undefined fees may apply.