New Resort Fee Legislation Would Disrupt How Hotels Are Sold Online

New bipartisan legislation in the U.S. Congress would change the way hotels and online travel agencies display what one supporter called “the most-hated fee in travel,” hotel resort fees.

Democratic Congresswoman Eddie Bernice Johnson of Texas and her Republican peer Jeff Fortenberry of Nebraska have introduced the Hotel Advertising Transparency Act of 2019, a measure that would bar hotels, any other type of short-term rentals, or a “person” from advertising rates that don’t include all fees, except for government-imposed taxes and fees.

There would be penalties for any person or entity that advertises rooms without including these fees, which are variously called resort fees, destination fees, cleaning fees, or facility fees, for example, in the initially listed room rate.

In the legislators’ announcement about the proposed law, Lauren Wolfe, attorney for Travelers United, a consumer nonprofit backing the measure, said, “The U.S. Congress is taking on the most-hated fee in travel. 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.”

Other supporters of the bill include Consumer Reports, the Business Travel Coalition, Consumer Action, Consumer Federation of America, the National Consumers League, and U.S. Public Interest Research Group.

The measure, if it eventually makes its way through Congress and gets signed by the president, would upend how hotel websites and online travel agencies display hotel rates and fees. Today hotels that charge such resort fees generally separate them from the base room rate, and often disclose them in ways that can be misleading to consumers.

For example, consider a listing for Marriott International’s The Westin New York Times Square — which charges a $30 per night “destination fee” — for an October 9 stay.

• The initial listing on Marriott.com states the rate is from $401 per night. There is no inkling of a destination fee on top of that rate.
• Marriott has a relatively new feature on the second screen: a disclosure atop the listing that says, “Please note-US30 daily destination fee added to room rate includes US30 food-beverage credit/premium Internet/1 tour pass and more.” However, if you select the “Rate Details” drop-down menu alongside a $401 member rate or a $409 regular rate for a king bed in a grand deluxe room, there is nothing detailed about the destination fee.
• When you navigate to the third screen to review reservation details, it says $409 per night, and $98.25 in “taxes and fees,” for a subtotal of $507.25. It doesn’t say anything about a nightly resort fee, although that’s included in the total rate. And you’d need to open a drop-down menu, Summary of Charges, to see the $30 “destination amenity fee” disclosed.
• After booking the room, the fourth screen on Marriott.com lists the total rate of $507.25, but only discloses the destination fee in smaller type under details of the stay.

The second page of search results on Marriott.com discloses a daily destination fee, but the rate details drop-down menu says nothing about it.

Hotel resort fees have become controversial in recent years. The U.S. Federal Trade Commission has been warning hotels and online travel agencies to get more transparent about hotel-fee disclosures since 2012; the District of Columbia sued Marriott International in July over “deceptive” resort fee disclosures; shortly thereafter the Nebraska state attorney general sued Hilton over resort fees, and Booking Holdings turned up the heat on hotels early that month when it announced the company would begin charging hotels commissions not just on the room rate, but on resort fees, as well.

Attorneys general in just about every state in the United States are likewise probing hotel resort fees and how they are advertised.

The legislation could also have a large impact on Airbnb-like short-term rentals, which advertise cleaning and other fees separate from the nightly rate.

In Defense of Resort Fees

While consumers and online travel agencies take a dim view of resort fees, which often bring sticker shock when guests check out of a property, hotels that levy them see resort fees as a key profit source and therefore an integral part of their business models.

Marriott Chief Financial Officer Leeny Oberg, interviewed at Skift Global Forum in New York City in September, defended its use at 200 of Marriott International’s 7,100 properties. (See the full video of the interview here. The resort fee discussion begins at 21:00.)

“Resort fees tend to be a hot topic because I think you’ve probably seen there’s been some chatter out there from the (state) attorneys general about the way they are displayed,” Oberg said in response to a question from the audience. “And I’ll remind everybody that we always make sure they are very clearly displayed before you actually book a room.”

Oberg said properties participate in a “really thorough process” to justify the imposition of resort fees.

“I think it’s not perhaps as big as some may think, but I think it’s been an important component of recognizing that at a number of hotels there are opportunities that normally would have to be paid for,” Oberg said.

Oberg added that in some markets, resort fees give properties “the opportunity to deliver this great value to the customers.”

Won’t Happen Quickly

The Hotel Advertising Transparency Act, which has been referred to a subcommittee of the House Committee on Energy and Commerce, will not get a hearing before 2020 so legislative action is likely not on a fast track.

Still, momentum is building for reform in the way hotel resort fees get displayed online.

The bill, which notes that “advertising that does not reflect the true mandatory cost of a stay at a place of short-term lodging is deceptive,” emphasizes that this proposed federal legislation would not prohibit actions against resort fee advertising leveled by authorities at the state level.

The hotel industry will certainly lobby for changes in the bill.

Meanwhile, Rebecca Kelly Slaughter, a commissioner on the U.S. Federal Trade Commission signaled her support of the legislation when it was announced saying, “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, period.”

If the legislation becomes law, its impact would reverberate across online travel. It would level the playing field in metasearch sites such as Kayak, Trivago, and Google Hotels, where some hotels list their total rates because they don’t charge resort fees, and other properties merely list their base rates without the resort fees included. The same is true at online travel agencies sites such as Expedia.com and Priceline.com.

In other words, this legislation, if it becomes law, would ease the way travelers comparison shop for hotels — and would likely force some hotels to rethink the way they do business.