The Federal Trade Commission has finalized a rule banning deceptive bait-and-switch pricing for hotels, short-term rentals like Airbnb, and event tickets. They’re targeting resort fees, cleaning fees, and other add-ons that aren’t clearly disclosed during pricing display prior to booking.
It’s a practice where the advertised price of a room is not the price. A night at a hotel costs more than the amount you are shown when shopping (the room rate).
Moreover, these fees make it harder to comparison shop. They aren’t generally shown when shopping for a rate, each of the properties you might consider appears with a price that is less than the full price (and frequently not even by the same amount).
Some hotels have fees to use the bathroom mirror, for streaming your own content on the in-room tv, an add-on to use the elevator and extra charges for paying with the hotel chain’s own credit card. onsieur Thénardier would be proud!
Here’s what the rule requires:
- “]B]usinesses [must] clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price of live-event tickets or short-term lodging.”
- “Businesses cannot misrepresent any fee or charge in any offer, display, or ad for live-event tickets or short-term lodging” but that was already true, though largely unenforced. Hotels mislabel their own fees as taxes all the time.Here’s a Hilton, a Marriott, and an IHG property making up government fees, the first two are fees requiring the guest to pay the hotel’s property taxes while the latter is simply made up out of whole cloth.
- “display the total price more prominently than most other pricing information”
- “businesses that exclude allowable fees up front [must] clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers consent to pay” but that’s been the FTC’s position for a decade.
For the most part, hotel chains do a decent job now of displaying total cost inclusive of scam fees for their own properties on their own website. The worst is online travel agency sites, where it appears that hotels are less expensive because these fees are omitted until checkout.
When you have to click all the way through a booking to see fees disclosed, it’s difficult to price-compare. And when that’s permitted, there’s a strong incentive to deceive. Not only does deception make a hotel look less expensive, transparency makes the hotel look artificially more expensive than bad actor properties who hide their total price.
It’s not at all clear that this new FTC will put a stop to this, although they seem to suggest that it will.
Hotels use these fees because,
- They may not be subject to discounting in a rate agreement.
- They aren’t always subject to taxation.
- They make a property look cheaper than competitor properties. If competitors have resort fees, a hotel needs to in order not to be advantaged. If competitors don’t, they want to in order to gain an advantage.
- When paid to a property on-site rather than at booking, the hotels may not owe commission on these charges
If Expedia and Booking.com change their practices, the industry will be much better. What I want to know, though, is how does the rental car industry which is even worse continue to get a pass?
