Hotel resort fees, the hidden charges added to advertised room rates at the end of the booking process, are under attack by federal legislation that says they’re deceptive and should be disclosed up front.
The fees, which have grown into a big part of the profit profile for resorts on the Las Vegas Strip, are targeted in a bipartisan bill sponsored by U.S. Reps. Eddie Bernice Johnson (D-Texas) and Jeff Fortenberry (R-Nebraska) that would require all hotels and resorts to post the full price of a nightly room inclusive of all fees, not including taxes, during the booking process.
The Federal Trade Commission, along with state attorneys general, would have the ability to enforce the provision through the Federal Trade Commission Act.
“When travelers search for hotel options, they deserve to see straightforward prices. They should not get hit with hidden fees that are designed to confuse consumers and distort the actual price,” Fortenberry said.
Johnson added, “Consumers should be able to enjoy their vacation without being ripped off and financially burdened.”
The fees, which go by a variety of names𑁋”venue fee, destination fee, facilities fee, amenities fee, urban resort fee”𑁋will total more than $3 billion nationally in this year alone, according to the legislation, the “Hotel Advertising Transparency Act of 2019,” as it’s titled.
In Las Vegas, where the fees have long been a source of tourist complaints, casinos say they require them to recoup costs for in-room wifi, boarding pass printing, free local calling, fitness center access and other services. They can range from $15 to as high as $45 a day at some of the luxury-priced resorts.
“The bill, if successful, will have an impact on the larger scale Las Vegas Strip operators, namely MGM Resorts International and Caesars Entertainment,” Deutsche Bank gaming analyst Carlo Santarelli said.
Morgan Stanley analyst Thomas Allen said the fees account for roughly 3 percent of revenue and 10 percent of cash flow for Caesars and MGM.
Santarelli said online travel agencies represent between 20 percent and 25 percent of the hotel rooms sold for the 18 Strip resorts operated by MGM and Caesars. The companies could see a cash flow impact of between $10 million and $15 million annually because the commissions they pay the sites would increase if posted room rates included the fees.
A representative of the Nevada Resort Association, whose membership includes 59 Southern Nevada resorts and 12 from Northern Nevada, declined comment, according to news reports.
The District of Columbia and Nebraska have filed lawsuits against Marriott International and Hilton Worldwide for the “drip pricing,” as it’s sometimes called, where an online booking site advertises one price, then incrementally increases the cost through mandatory fees.
“Travelers shouldn’t have to read the fine print to figure out all the fees they’ll be charged for staying at a hotel,” Consumer Reports director of financial policy Anna Laitin said. “Hotels should be required to disclose all fees in their advertised rate, so consumers won’t get stung with a higher bill than what they’re expecting to pay when booking a room.”
In 2012 and 2013, the FTC warned 35 hotels and 11 online travel agents that resort fees were not adequately disclosed on their hotel reservation websites and that such practices may violate the law by misrepresenting the price consumers expected to pay for their hotel rooms.
FTC Commissioner Rebecca Kelly Slaughter said at the time, “If a fee is part of the total price consumers must pay for a hotel room, then it must be part of the price shown to consumers. Surprise fees are unfair to consumers, period.”
In response, many hotels and online travel agents modified their disclosure practices. But consumer complaints about the practices have continued.
Travelers United, a non-profit travel advocacy group, joined Consumer Reports in coming out in support of the bill.
“The U.S. Congress is taking on the most hated fee in travel,” said Lauren Wolfe, an attorney for the group. “We urge Congress to support this bipartisan common-sense bill. It is important to note that this bill does not just cover mandatory fees for hotels, but it also will require that all fees are disclosed in the advertised rate for short-term rentals,” including Airbnb.
Rep. Dina Titus (D-Las Vegas) did not comment directly on the legislation but said, “I support prominent, early and clear disclosure of costs and fees. That’s why I welcomed the original guidance that the Federal Trade Commission provided to help ensure transparency in the industry.”
