President Biden Announces War On Hotel Resort Fees

President Biden has declared war on ‘add-on’ fees, including hotel resort fees that he describes as ‘hidden hotel booking fees’. While we can all sympathize with the sentiment, his announcement is unlikely to do much to benefit hotel guests.

  • Resort fees are fraudulent. The advertised price is not the price. A night at a hotel costs more than the amount you are shown when shopping (the room rate).

  • Resort fees make it harder to comparison shop. They aren’t generally shown when shopping for a rate, each of the properties you might consider appears with a price that is less than the full price (and frequently not even by the same amount).

However there are multiple reasons that hotels engage in the shady practice.

  • Resort fees may not be subject to discounting in a rate agreement.
  • Resort fees aren’t always subject to taxation.
  • Resort fees make a property look cheaper than competitor properties. If competitors have resort fees, a hotel needs to in order not to be advantaged. If competitors don’t, they want to in order to gain an advantage.
  • Here’s the thing. The position of the Federal Trade Commission has been that they are legal, as long as they are disclosed before a customer commits. That, apparently, has changed.

    We’re cracking down on hidden "junk" fees like surprise overdraft and deposit fees, credit card late fees, hidden hotel booking fees.

    Even those termination charges that stop you from switching cable and internet plans to get a better deal.

    They add up. We're taking action.

    — President Biden (@POTUS) October 26, 2022

    It’s not clear though that the Biden administration can do much about resort fees, other than threaten (which could well be enough!). The FTC’s position that resort fees are not deceptive, and therefore are legal, was articulated at a time it was dominated by Obama administration appointees.

    It seems better to first remove the government incentives that encourage resort fees in the first place (differential treatment of hotel room rate versus add-on fee taxes at the state and local level).

    Online travel agencies could force an end to the practice, requiring resort fees and other add-ons to be provided in data feeds, and displaying only all-in pricing, excluding hotels that do not comply. These sites do not push for this, out of fear competitor sites wouldn’t (and those sites would have more hotel inventory, which also appears cheaper) and because consumers are an OTA product they sell to hotels not their actual customers.

    Hotel chains could end resort fees too, by banning the practice for their franchisees and refusing to engage in the practice at their managed hotels. But they do not do this because for the chains, too, guests are the product not the customer (hotel owners are).

    Actual laws need to change, or a sufficiently-compelling class action tort case needs to force change. We’re unlikely to see a real difference from an administration’s vibe shift or executive action that’s contrary to the historically prevailing view of the law.

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