Hotels Harm Consumers By Not Including ‘Resort Fees’ In Room Rates

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Hotels Harm Consumers By Not Including ‘Resort Fees’ In Room Rates

Image courtesy of frankieleon

Staying in a hotel comes at a price — there’s the room rate, service charges, taxes, and hotels are increasingly taking on “resort fees” to cover amenities like internet access, parking, gym, spa, and pool — even if you never use them. These fees, which can significantly increase the total cost of a room, are almost never included in the advertised price and are often minimized or omitted until it comes time to actually book your stay.

This afternoon, the Federal Trade Commission’s Bureau of Economics released a 49-page issue paper [PDF] on resort fees, and found that when hotels don’t include mandatory resort fees in their room rates, it increases the “search costs and cognitive costs of finding and choosing hotel accommodations.”

In other words, it results in a huge waste of your time and effort.

To come to that conclusion, the Bureau looked at the costs and benefits of disclosing mandatory resort fees separately from room rates by reviewing research on drip pricing — where online retailers provide a total price process — and partitioned pricing — where the cost is broken into two areas: a large base price and a smaller surcharge.

According to the paper, for consumers who are trying to comparison shop, either through hotel websites or through online travel agent sites, mandatory resort fees force them to click-through additional web pages or calculate and remember total hotel prices.

“This leaves them with a choice: ‘either to incur higher total search and cognitive costs or to make an incomplete, less informed decision that may result in a more costly room, or both.’” the report states.

Hotels could eliminate the costs of resources and wasted time for consumers simply by including the resort fee in the advertised price of the room, or listing the components of the total price separately, but prominently.

Resort fees have become a hot topic among consumers and business owners in recent years.

Consumers and advocates have argued that the fees are misleading when they aren’t disclosed in the room rate, while the hotel industry contends they are saving customers’ money because the fee is less than they would pay for the services ala carte.

In 2012, the FTC sent warnings to 22 different hotel operators warning them that they weren’t doing enough to disclose these fees, yet nothing happened. Three years later consumer advocacy group Travelers United called on the FTC to put an end to deceptive resort fees and take action against hotel operators that refused to oblige.

More recently, a federal advisory panel in Sept. 2015 recommended that clearer disclosures of the fees were needed. However, no action was taken at the time.

Just last week, the White House’s National Economic Council included resort fees in its report on hidden fees that “threaten the competitive process.”