Hidden charges that can push up hotel rates in the US dramatically could finally be outlawed by an initiative from Joe Biden.
The president has vowed to eliminate “resort fees” – mandatory extra charges that many properties impose to make their base rates look more competitive.
A room at Caesar’s Palace in Las Vegas tonight costs $174 (£146) at first sight. But once local taxes and a “resort fee” of $46 (£39) is added, the price increases by 72 per cent to $299 (£251).
Last month President Biden said: “Each year these junk fees that companies charge cost Americans tens of billions of dollars, weighing down family budgets and making it harder for people to pay the bills, so my administration has taken action to eliminate these.”
Now the Federal Trade Commission (FTC) has published “advance notice of proposed rulemaking” to outlaw “deceptive or unfair acts or practices relating to fees”.
Lina Khan, chair of the FTC, said: “Resort fees at hotels first emerged in the late 1990s. By 2015, they accounted for one-sixth of total hotel revenue. That’s $2bn per year.
“With rising prices, fees are becoming more prevalent, allowing some businesses to raise effective prices without appearing to do so.”
The commission found resort fees ‘‘artificially increase the search costs and the cognitive costs’’ for consumers.
One FTC commissioner, though, dissented from the proposal. Christine Wilson said it “relies on flawed assumptions and vague definitions; ignores impacts on competition; and diverts scarce agency resources from important law-enforcement efforts”.
The White House says: “There is nothing wrong with a firm charging reasonable add-on fees for additional products or services. In the interests of customisation, firms should be free to charge more to add mushrooms to your pizza or to upgrade you to a hotel room with an ocean view.
“However, in recent years we’ve seen a proliferation of “junk fees” – a category of fees that serve a different purpose.
“By hiding the full price, this practice can lead consumers to pay more than they would otherwise, and it also makes it hard for consumers to comparison shop.”
While sites such as Booking.com generally show the fully inclusive price to UK customers, tour operators selling package holiday warn customers they may have to pay resort fees…
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