Hotel operators warned about 'drip pricing'
Price quotes that exclude 'resort fees' and other mandatory surcharges may be deceptive
Wednesday, December 5, 2012
Have you ever found what you thought was a good hotel price online and -- as you went through the reservation process -- seen the ad-on prices piling up?
The Federal Trade Commission (FTC) has taken a close look at the practice and warned 22 hotel operators that they may be violating the law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms.
The warning letters cited consumer complaints that surfaced at a recent conference the FTC held on “drip pricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process.
According to the FTC letters, “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.’ These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions.”
The warning letters also state that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.
“Consumers are entitled to know in advance the total cost of their hotel stays,” said Federal Trade Commission 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 letters strongly encourage the companies to review their websites and ensure that their ads do not misrepresent the total price consumers can expect to pay.
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