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FTC warns hotel companies to inform customers about ‘resort fees’

Have you ever gone to a meeting or conference at a big resort hotel and found that in addition to the quoted room rate, you also had to pay a mandatory daily “resort fee” of up to $30 a night—a fee you might not have known about until you checked in? Those fees have become increasingly common in the lodging business, but now the Federal Trade Commission is firing a warning shot across the industry’s bow.

In a letter to 22 leading hotel companies, the FTC said it has been receiving a rising number of complaints from consumers who didn’t see any information about those mandatory fees when they booked their rooms on the hotels’ web sites.

The FTC refers to this kind of charge as “drip pricing,” where not all of the mandatory cost of a product or service is included in the quoted rate or advertised price.

“One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or Internet access, sometimes referred to as ’resort fees,’” the FTC said in its letter.

“Consumers are entitled to know in advance the total cost of their hotel stays,” said FTC Chairman Jon Leibowitz. “So-called ’drip pricing’ charges, sometimes portrayed as ’convenience’ or ’service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers.”

The FTC has the authority to regulate commercial practices that it deems to be deceptive or fraudulent, and it indicated that these kinds of undisclosed hotel fees might fall into that category. The letter noted that resort fees are sometimes high enough that they “could certainly affect consumer purchasing decisions.”

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