A new private lawsuit has been filed against Hyatt over resort fees. Consumer group Travelers United has filed a class action in Washington, D.C. against the chain. Especially highlighted in the complaint is the Grand Hyatt Washington and its ‘destination fee’.
- The hotel adds a $20 per night destination fee
- And Hyatt bundles this into “taxes and fees” – disclosed late in the checkout process – making it appear that this is a mandatory government charge
Travelers United is suing under the District’s Consumer Protection Procedures Act requires businesses to sell products at their advertised prices. But Hyatt advertises prices for this hotel at rates consumers cannot pay, since the hotel adds on a fixed amount to its prices in the form of destination fees.
Resort Fees Harm Consumers
Resort fees at hotels are a scam. They are mandatory, which means they are part of the cost of your room. But they aren’t included in the room rate. The advertised rate doesn’t cover the cost of the room.
Hotels do this because,
- It makes them look cheaper than the competition, or at least if other hotels are charging resort fees it keeps them from looking more expensive
- In some jurisdictions it may save them on taxes, versus bundling in the room rate. It also may save on commissions.
- It may also fool customers into feeling that their stay is cheaper than it is.
If the bundles of goods contained in resort and destination fees were beneficial to guests, they would be voluntary and guests would buy them. In most cases they’re items that are useless to the majority of guests, but with high headline ‘values’ to perpetuate the fiction that they’re valued-added.
The practice harms consumers. Separating out part of the price of a hotel room from the price makes it harder to compare costs, even when the resort fee is disclosed prior to booking. You search hotels, and see a display that doesn’t include full cost. So you’d have to click through to the final confirmation for each one and build a spreadsheet to do a comparison.
Governments Have Turned Against Resort Fees
During the Obama administration the Federal Trade Commission offered guidance that as long as resort fees were disclosed prior to booking. However more recently government opinion has turned against these fees.
President Biden has called for a ban on resort fees but isn’t actually doing anything about them (essentially, preserving them as a pocket book campaign issue).
Four years ago several state attorneys general sued major hotel chains over their resort fee practices. Marriott entered into a settlement with Pennsylvania because that state was willing to forego any penalties and just obtain commitments of better behavior going forward.
Generally Marriott displays full prices including taxes and fees on its website, but you won’t see it when comparing different hotel brands with Marriott hotels on other sites. (Marriott doesn’t always comply.) My understanding is that Hilton has the technology ready to do the same thing, but is just waiting to see what direction the industry goes. Other chains would face an IT lift.
After Marriott was set up with resort fee transparency on its own site, Marriott settled with Texas agreeing to do what it was already doing (and not pay penalties for past behaviors). This was trumpeted as a win by embattled state attorney general Ken Paxton. Paxton is also suing Hyatt.
This Is An Industry-Wide Problem, Not A Hyatt Problem
It’s not clear to me why Marriott and Hyatt are most in the crosshairs. In Texas, at least, Hyatt may be seen as ‘the Democrat hotel chain’ since it’s controlled by the Pritzker family, heavy donors to Democrats, it includes a sitting state governor, as well as a former cabinet secretary in the Clinton administration. (The family wasn’t all Democrats.)
Hilton has been sued by other state attorneys general. IHG has some of the least control over its franchisees and has anecdotally resulted in some of the most egregious charges.
Across chains we’ve seen hotels assess extra fees for electricity in the room, for the hotel’s property taxes, and for credit card acceptances (whether paying with a credit card or not!) – fees that aren’t disclosed up front and sometimes not even prior to making a booking. Marriott still hasn’t fully gotten its act together but has moved in a positive direction to at least disclose all of these fees through its own channels, but ever-consumer unfriendly online booking sites haven’t improved.
Consumer lawsuits in jurisdictions with friendly consumer statutes are an interesting approach to pushing the industry to further clean up its act.