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New report shows hidden resort fees are costing consumers

Checking out of a hotel room is usually a stress-free process – unless your bill is filled with unexpected charges.

In many cases these charges are resort fees, which the Bureau of Economics (BOE) defines as per-room, per-night, mandatory fees charged by some hotels. Resort fees have been around since the 1990s, but they’ve steadily increased in recent years, much to the chagrin of consumers. In fact, according to consumer advocate Travelers United, consumers paid $2 billion in mandatory resort fees in 2015, up 35% from 2014.

According to the Travelers United, the average resort fee reached $24.93 a night in October 2015. The biggest offenders are in popular tourist destinations like Las Vegas, Miami, Orlando, Anaheim, Oahu and Maui.

Guests hate resort fees and and hotels defend them. To get to the bottom of the contentious subject, the Bureau of Economics took a hard look at the impact of resort fees in a report published this month.

The problem

Hotels use resort fees to pay for services like wi-fi, parking, beach services and fitness facility usage. While customers certainly enjoy access to these amenities, what they don’t agree with is how the fees are disclosed.

According to the BOE, the biggest consumer gripe is that resort fees are often left out the advertised price. This practice is called partitioned pricing, and is used by many online travel agents (OTAs), such as Expedia and Orbitz, to divide the price into multiple components without always disclosing the total. For example, if you’re on an OTA looking for a hotel in Las Vegas, the room rate might come up as $220 per night. But that’s not the real rate – the resort fee, which is typically around $20, would only be displayed when you check out of the hotel.

Another deceptive practice is called drip pricing, which involves advertising only part of a product’s price upfront and revealing additional charges later as consumers go through the reserving and buying process. By slowly revealing the total price, customers might be moments away from clicking “book” before they see all of the added fees.

Travelers United found that nearly 1,671 hotels and lodging sites in the US charge resort fees that are not included in the daily lodging rate advertised. They report that this is up 40%, from 1,191 hotels in 2014. While it’s illegal to surprise guests with hidden resort fees, OTAs are able to skirt the rules by mentioning fees in the fine print that many customers simply don’t read when booking.

The solution

In 2012, the Federal Trade Commission (FTC) gave warnings to 22 hotels where resort fees were not disclosed during the reservation process. This caused many hotels to change how they presented resort fees, but it wasn’t enough to rid the industry of shady fee practices altogether. In June 2016, it was rumored that the FTC was going to mandate once and for all that all fees be included in the advertised price. Consumers are still waiting to see if any action will be taken.

For the BOE, fee transparency by online travel agents and hotels is the one thing that could help regain customer trust.

“These services could be provided without charging separately-disclosed resort fees by making them optional to customers for additional fees,” said the analysis. Meaning customers would have the opportunity to turn down certain amenities and the costs associated with them.

Be sure to read the fine print when booking a hotel online. (GETTY)
Be sure to read the fine print when booking a hotel online. (GETTY)

However, the American Hotel and Lodging Association (AHLA) warns that making the mandatory fees optional could end up costing consumers more. In general, resort fees group multiple amenities into one cost (sort of like cable TV packages). If broken down and selected individually, the AHLA says guests would end up paying more. (We’re sure some consumers would argue that point.)

Another option would be for hotels to simply bundle resort fees with the room costs and include everything in the room rate. This approach would let hotels charge for services while allowing guests to make informed purchasing decisions. Either way, the BOE found that separating the resort fees only benefits consumers if the total price is clearly disclosed upfront.

What can you do?

Read the fine print

Don’t assume the advertised price is what you’ll pay. Before you click “Book,” read the hotel terms to see exactly what you’re paying for. Oftentimes it will stay things like “Hotel fees not included” or “The price shown does not include any applicable property service fees.” If you read something that is unclear, call the hotel directly to see how much you’ll be charged per day during your stay.

Look for a breakdown

Some OTA’s will give you the option to “View Price Breakdown” before you checkout. Use this as an opportunity to see which services you’ll be charged for and the total daily fees.

Compare OTA with hotel listing

Using an OTA is a great way to find a deal, but it can also lead to confusion over fees. If you want to ensure you’re getting the full picture, always compare the rate and fees on the OTA with the rate and fees on the hotel’s reservation site. In many cases the OTA will advertise a lower price, but they’ll lump together fees and taxes, so it’s hard to know what you’re paying for. The actual hotel site typically does a better job at breaking down exactly which services are included in the resort fee. Referencing both will ensure that you are getting what you pay for.

Brittany is a writer at Yahoo Finance.


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