Resort Fees Come Under Fire From The FTC

Long a thorn in the side of travelers, the practice of a hotel charging a nebulous "resort fee" has recently come under scrutiny from the federal government.

The Federal Trade Commission's Bureau of Economics yesterday released a report on resort fees which broke down how hotels which do not include the fees in the price of the rooms are wasting the time and effort of travelers.

The report from the Federal Trade Commission analyzed the ways in which a traveler has to search through hotel websites before being able to see what the resort fees are and how much the total cost would be for the accommodation.

On one hand, many hotels use drip pricing to hide resort fees by advertising one price, but adding additional costs as travelers go through the buying process. On the other hand, partitioned pricing divides the price of the room into multiple components without disclosing the total.

"This analysis finds that separating mandatory resort fees from posted room rates without first disclosing the total price is likely to harm consumers by increasing the search costs and cognitive costs of finding and choosing hotel accommodations," the report's author Mary W. Sullivan said in her executive summary. "In this situation, a consumer's choice is 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 analysis finds that separating resort fees from the room rate without first disclosing the total price is unlikely to result in benefits that offset the likely harm to consumers."

Resort fees have been a major concern for travelers and travel agents, who not only complain that the fees present an inaccurate room rate at times, but also are not always clear what the fees are paying for.

According to the nonprofit consumer group Travelers United, travelers in the United States paid an estimated $2.04 billion in mandatory resort fees in 2015, a 35 percent jump from the previous year.

The battle against resort fees has raged for years. In 2012, the Federal Trade Commission sent warnings to hotel operators telling them to do a better job disclosing fees and went through the same process three years later, but nothing came of the warnings.

In addition to the recent Federal Trade Commission report, the White House's National Economic Council brought up concerns surrounding resort fees in a report last week which discussed hidden fees that threaten the competitive process.

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