Washington, D.C. Is Suing to Stop a Ridiculous Hotel Pricing Practice
A Marriott hotel in D.C., where the chain is being sued for its “resort fee” practice. Photo: NICHOLAS KAMM/AFP/Getty Images
“Resort fees” are some bullshit.
If you’ve booked a hotel in the last few years, you’ve probably encountered the dreaded resort fee. If not, this is how it works: Your hotel room rate is quoted at, say, $150 per night. But in addition to taxes, the hotel tacks on a “resort fee,” maybe $20, maybe $35, which it says covers your use of various amenities — the pool, the gym, the landline telephone, what have you.
There are some much-detested fee practices I am prepared to defend, such as airline fees for the first checked bag. But for an additional fee to be defensible, it has to be truly additional: You need to have the option of declining the feature and not paying the fee. A resort fee doesn’t work like that: It’s charged whether or not you use any of the amenities the fee purports to cover. Since it’s a mandatory charge, it’s an integral part of the room rate and should be quoted as such; otherwise, the hotel is misleading you about the price at which it will rent you a room.
Now, the District of Columbia is suing Marriott over exactly this issue, saying Marriott’s resort fees violate the District’s Consumer Protection Procedures Act. Marriott is the largest hotel operator in America, but it’s hardly the only offender on the resort fee front, and this lawsuit should serve as notice to other hotel groups that they could face trouble over their fees, too.
Of course, there aren’t a lot of resorts in D.C. But resorts had such success with the fee gambit in markets like Las Vegas and Hawaii that hotels started tacking such fees onto rates at non-resort properties in major cities like New York, San Francisco, and Washington. In cities, the fees are called “destination fees,” and without lush pools to point to, hotel operators have had to get creative in their claims about what the fees are for.
In the case of the Grand Hyatt New York, your $30 daily destination fee includes the opportunity to tour the hotel’s roof, from which you can see the Chrysler Building, located across the street. It also gets you a book of coupons for discounted food at Grand Central Terminal. At the Park Central Hotel San Francisco, a Marriott property, your $44.46 daily destination fee entitles you to free notary services and a $5 discount on a hop-on/hop-off sightseeing bus tour.
The destination fee also tends to cover some services you are more likely to use, such as Wi-Fi and telephone calls. But this only highlights how the destination fee is nonsense. Wi-Fi has long been free at limited-service hotels like Courtyard by Marriott and, in recent years, robust competition among hotel chains has led to them generally make it free at full-service properties, too. The hotel operators may frame the destination fee as a “convenient” way to pay for a number of amenities you value, but it’s actually a way to charge for something you probably would have otherwise gotten for free, along with a bunch of other things you likely won’t use.
The argument from the D.C. attorney general is simple: If you have to pay the fee, it’s part of the price and should be quoted as such. Otherwise, hotel operators mislead their customers and gain unfair advantages over competitors who quote their rates in a more straightforward manner.
Before filing this lawsuit, D.C. had been working for years with the Federal Trade Commission and attorneys general from most of the 50 states to rein in these fees. In 2012, the FTC warned hotel companies against what it calls “drip pricing,” where you “drip” part of the mandatory room charge in after quoting a base rate, and a 2017 FTC report found the practice was harmful to consumers. But CBS News reported in late 2017 on an allegation from the attorney general of Washington state that the FTC had “gone dark” on the resort fee issue, leaving the states on their own to figure out how to proceed.
These fees are unlikely to go away without outside intervention. I almost sympathize with the individual hotel operators — once a competitor has adopted the “destination fee” structure, hotels face the option of adopting it themselves or appearing to be less competitive on price than they actually are. But if litigation like Washington D.C.’s is successful, it will force hotels onto a level playing field where they can display prices honestly without fear of being undercut.