A a very high profile hotelier friend sent me an article just now from Hotel News Now. As his email interjected, I “sit here agape and slack jawed” at the prospect the US hotel industry could go down the chute. At least Ed Watkins visits upon the idea that all business credibility is at stake if the FTC finds foul play from some 22 hotel companies and a few OTAs. You are reading this right, alright.
Resorting to fees for resorts - courtesy © Kzenon - Fotolia.com
Watkins, the Editor of Hotel News Now, calls the FTC allegations “ugly”, and if this letter from the agency over what regulators term “deceptively low estimates” is indicative at all, some hotels are in for a big bad PR blow. At the center of the FTC row is a conference the agency held to discuss so-called “drip-pricing” (FTC PDF of minutes) – if the derogatory connotation of the term were not indicative enough, the implications are damning if hotels are found to have knowingly misled guests.
While none of the hotels engaged by the FTC have been announced or come forward, Watkins points to a recent Caesars Entertainment acknowledgment that for the very first time, resort fees as hight as $25 per night were imposed on certain Vegas properties. A copy of the letter the FTC sent to the suggested hotels can be read here, and I quote from the ending of the open letter sent in November from Mary K. Engle, Associate Director for Advertising Practices for the FTC below:
“We reviewed your website at __________ and found that in at least some instances mandatory resort fees are not included in the reservation rate quoted to consumers. We strongly encourage you to review your company’s website to ensure you are not misrepresenting the total price consumers can expect to pay when making a reservation to stay in your hotel. Please be advised that the FTC may take action to enforce and seek redress for any violations of the FTC Act as the public interest may require.”
A blog post by Amy Hebert, the FTC’s Consumer Education Specialist, iterates the agency’s moves similarly. The announcement carried with it Federal Trade Commission Chairman Jon Leibowitz’s comment below:
“Consumers are entitled to know in advance the total cost of their hotel stays. So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers. Consumers are entitled to know in advance the total cost of their hotel stays,” said . “So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers.”
In associative news, Hagens Berman has filed a class-action lawsuit against several online travel sites including Expedia, Travelocity, Booking.com, Priceline.com and hotel brands Hilton Hotel, Sheraton Hotels and Resorts, Starwood Hotels and Resorts Worldwide (NYSE:HOT), and Marriott International, Inc.
Filed August 20, 2012, in the U.S. District Court for the Northern District of California, the class action suit pits hotel-room purchasers nationally against the defendants over allegations the online entities conspired to secretly – “create and enforce Resale Price Maintenance (RPM) agreements to thwart competition on hotel room prices, especially from price-cutting online retailers.”
Other hotels named in the suit are; Trump International Hotels Management, LLC, Kimpton Hotel & Restaurant Group, LLC, and Intercontinental Hotels Group Resources, Inc. The firm also provided contact information for anyone who might have knowledge of, or who might have been affected by the actions of the defendants in the suit. The Hagens Berman contact number is (206) 623-7292 and their email for this case is: hotelantitrust@hbsslaw.com.