Opaque Hotel Resort Fees

U.S. hotels are projected to collect $1.95 billion in fees and surcharges in 2012. Revenue from hotel fees has nearly doubled in the past 10 years according to HotelNewsNow.com (www.insideflyer.com/link/?7280). Choosing to pay for parking, Internet or a telephone call at the hotel are convenience fees; however, mandatory hotel fees charged separately from the displayed room rate are a growing consumer issue gaining attention in 2012.

Hotel “drip pricing” is a pricing technique in which hotels advertise only part of the actual room rate and reveal other charges later in the booking process. Resort fees are one of the most common drip pricing practices. Sometimes these fees are buried in the fine print of the rate terms.

In August 2012 Ed Perkins, syndicated travel columnist, Kevin Mitchell, Chairman of the Business Travel Coalition and Charlie Leocha, Executive Director of Consumer Travel Alliance called on the Federal Trade Commission to prohibit drip pricing at hotels and resorts. Their letter (http://insideflyerus.wpengine.com/link/?7281) asked the FTC to require all mandatory fees and charges be included in the base rates of all hotel advertising.

The U.S. Department of Transportation set a precedent in the airline industry after fuel surcharges were introduced a few years ago during the rapid rise in fuel costs. These surcharges were often excluded from the advertised airfares. I wasted many hours searching advertised $300 airfares to Europe to learn the actual price more than doubled with hidden fuel surcharges. The DOT now requires all mandatory fees and taxes be displayed in airfare promotions.

To illustrate the hidden fees issue with a hotel example, I checked St. Regis Bahia Beach Resort in Puerto Rico on the StarwoodHotels.com booking site. The rate displayed showed $449 for a Superior Room. Only after selecting the $449 rate did I see an additional $60 per night mandatory resort fee on top of the $45.81 hotel tax. The same hotel room on Expedia, also with a $449 room rate showed tax and fees at $109.77. There was no itemization on Expedia to show the mandatory $60 resort fee hidden in the tax and fees for the reservation.

Mandatory resort fees may cover a variety of services like bottled water in the room, Internet access, pool access, fitness center access, local phone calls, parking and even items like a room safe and housekeeping. Resort fees typically are carved out of the displayed room rates in hotel advertising and online travel agency rates. This is a deceptive practice and results in hotel rate comparisons unfairly ranking higher priced hotels with resort fees to lower rate hotels without resort fees. The St. Regis Bahia Resort is displayed as a $449 per night hotel when the mandatory resort fee raises the actual daily rate to $509.

Priceline and Hotwire compound the situation when prepaid, nonrefundable rooms at hotels are not revealed to the consumer until the purchase is complete. Resort fees and other mandatory fees can be a significant addition to the final price paid for a room booked through an opaque booking channel. You do not know if the hotel has additional mandatory fees until after your purchase. Learning your $100 per night prepaid hotel reservation will actually cost an additional $30 per night after a resort fee is paid at the hotel can be a rude awakening.
Will resort fees be eliminated?

The movement for hotel rate transparency is not necessarily a move to eliminate resort fees. The objective is to require all mandatory hotel fees and surcharges be prominently displayed with the room rate. Drip pricing makes it difficult for consumers to compare the actual cost for staying at different hotels.

A related issue that peeves this loyalty traveler is resort fees are generally not considered part of the eligible room rate for earning loyalty points. Hotel loyalty members miss out on some significant points earning when a mandatory $60 resort fee is not eligible for a triple points promotion.

There is plainly something systemically wrong when a hotel loyalty program member earns points paying for daily Internet service at one hotel, yet does not earn points for another hotel in the same loyalty program after paying a mandatory resort fee that includes complimentary Internet as one of the resort fee benefits.

U.K. requires even more room rate disclosure than U.S.

Regulatory practices in the U.K. go even further by requiring hotel room advertising to display the final price after tax.

A July 2012 survey by Which? Travel magazine (http://insideflyerus.wpengine.com/link/?7282) revealed 11 of 24 major hotel chains did not prominently display U.K. hotel rates including VAT. Hotel brands in IHG, Hilton, Carlson, Marriott and Accor were cited as hotel chains showing rates excluding VAT until later pages in the booking process.

U.S. regulatory action requiring hotel room rates include mandatory hotel fees will move the hotel industry to consumer-friendly transparency.