Last updated: 09:29 PM ET, Fri May 16 2014

BTC Praises FTC's Crackdown on Hidden Hotel Fees

Hotel & Resort | November 29, 2012

The Business Travel Coalition (BTC), which has been largely focused on fighting airline fees, is praising the Federal Trade Commission's (FTC) warning letters to 22 hotel operators over so-called “drip pricing,” or hidden fees, that surprise consumers upon arrival at hotels. These fees typically include resort, housekeeping and Internet access fees, among others.

FTC's authority in this area comes from Section 5 of the Federal Trade Commission Act. This is virtually the same wording as in the Airline Deregulation Act at 49 U.S.C. § 41712, which vests authority for airline consumer protections solely at the U.S. Department of Transportation (DOT) with regard to hidden airline fees and other unfair and deceptive practices.

BTC said drip pricing is a deception scheme whereby a supplier carves out a portion of its true price, labels that portion as a mandatory extra fee or charge, deducts it from the true price, and features the artificially reduced remainder of the true price in advertising, online postings and price information supplied to global distributions systems and travel agencies. Long-time consumer advocate Ed Perkins, the Consumer Travel Alliance and Business Travel Coalition in August of this year called on FTC Chairman Jon Leibowitz to aggressively address the widespread practice of drip pricing by some hotels, motels and resorts.

BTC said in the case of the airline industry, since 2008, most major U.S. airlines have been charging for so-called ancillary services, such as for accessing premium seating, and have been hiding associated fees by withholding fee information from travel agencies. As such, agents and travelers cannot efficiently compare "all-in" prices (base fares and fees) of air travel alternatives and must visit numerous airline websites to search for fees and pay separately for the services. These hidden fees represent an unfair and deceptive marketing practice that is costing all air-travel consumers dearly.

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