“Resort fees” are extra charges, on top of a room rate, that aren’t optional. In other words they’re part of the price of a room, but the hotel advertises a lower price instead. That’s on face deceptive.

There is a clear logic for a hotel to charge a resort fee.

• If a hotel charges a $250 room rate and a $30 resort fee, that’s $280 a night. Yet that hotel appears to have a lower rate than one which charges $270 a night with no resort fee.

• If everyone else is doing it, a hotel that doesn’t is at a disadvantage.

• If no one else is doing it, it’s a way to gain an advantage.

• What’s more, the resort fee may not be commissionable and may not be discounted under group corporate deals, so money called a resort fee may be more profitable than money that’s part of a room rate.

What’s become especially egregious in recent years is the spread of resort fees to new markets, under different marketing. City hotels aren’t resorts and instead they promote “destination fees.”

Resort Fees are Ok With the FTC

Guidance from the Federal Trade Commission, though, is that resort fees are fine if they aren’t deceptive which means “a hotel prominently discloses the resort fee upfront and includes it in the total price.”

Generally speaking resort fees make it difficult to know at the start of search how much a hotel will cost, and makes it difficult to compare prices, but consumers are aware of such fees before they stay.

How Loyalty Programs Handle Resort Fees

Hilton and Hyatt don’t charge guests resort fees when redeeming points. Hyatt waives resort fees for top tier elites on paid stays. Marriott makes guests using their points pay resort fees.

Marriott’s terms say that if a hotel includes internet access in their resort fee then they must offer program members a different benefit. That almost never happens, and members should complain every time it doesn’t.

Participating Properties that have mandatory resort charges, which include internet access, will provide a replacement benefit, to be determined at each Participating Property’s discretion.

Hilton Honors says that if a resort charge includes an elite benefit, then it’s not an elite benefit at that hotel,

These Amenities are offered solely at the discretion of Hilton HHonors Worldwide, L.L.C., and the individual hotel. Not all Amenities are provided by all hotels within the Hilton Worldwide portfolio. When payment of a resort charge is required, check individual hotel for availability of included Amenities.

Cosmopolitan Las Vegas Charges a $39+tax Resort Fee

At Hilton resort fees actually reduce elite benefits which is another downside to resort fees.

Washington DC is Suing Marriott Over Resort Fees

The attorney general for the District of Columbia has filed a lawsuit against Marriott over resort fees. There is no logical reason to single out Marriott over Hilton or IHG other than that DC happened to investigate them as part of a multi-state attorneys general project. (Filing is here.)

Note, however that DC does not “seek[..] to criticize or outlaw the practice of having resort fees” as long as they are “fully and fairly disclosed to consumers in a transparent way.” And in fact current resort fee practices likely meet this standard most of the time. It’s an outlier case where resort fees are not put in front of guests at the time of booking. That’s why the Federal Trade Commission hasn’t had a problem with resort fees.

The problem with resort fees is that they:

• Are unquestionably disingenuous, a mandatory fee to stay at a hotel is also called ‘the price’ and there’s no valid reason for separating it out and indeed for not showing it as part of the cost of a stay.

• Make comparison shopping difficult, and create an incentive for others’ to obfuscate true costs to consumers.

Cosmopolitan Las Vegas

The question isn’t whether resort fees are described as offering services that provide value to a consumer. They usually don’t but that’s irrelevant. They’re simply a bad business practice.

Even DC, which is suing, admits that they’re legal as long as they’re disclosed. So the relevant question is what level of disclosure is necessary under the law (and in this case it’s a function of District of Columbia law, and they’re seeking funds in part to reimburse -District of Columbia residents).

Is failure to include a mandatory resort fee in a hotel’s room rate per se deceptive? Is listing a resort fee in a category called ‘taxes and fees’ misleadingly suggesting that the cost is mandate by the government?

There’s a Great Business Opportunity That Solves the Problem of Resort Fees

There are really two equilibria here: no one charges resort fees (although there’s an incentive for a given hotel to defect if resort fees are permissible as it makes their rates look cheaper than the competition) or everyone charges them.

If even one hotel charges them, we’d expect a shift towards everyone charging them. Destination charges were relatively new in New York just two years ago but have since become more common. So what’s stopping a hotel from instituting a resort (or destination) fee, leading others to follow?

To the extent resort fees aren’t illegal — the federal government says they aren’t and only DC’s Attorney General is acting so far, but won’t claim resort fees are or should be illegal — we need significant shaming of hotels to change their incentive. Hotels need to respect their guests, and that starts with honesty about the most basic element of a reservation, the rate.

The real solution comes from online travel booking sites. They’re afraid to show all-in pricing or else it’ll make another booking site appear to be cheaper, driving customers away to those sites.

An online travel website that actually had its customers best interests in mind, and helped consumers navigate getting not just ‘the best deal’ but ‘the best deal for them’ would, I think, generate real loyalty and earn outsized business. They would no longer have to spend billions to convince you to use their sites, you’d actually want to. Online travel agencies could earn business helping customers to compare options with all-in pricing.