Marriott Faces Lawsuit Over Deceptive Resort Fees

Attorney General of Washington, D.C. yesterday filed a lawsuit against Marriott over resort, destination and amenity fees.

The attorney general claims that Marriott has engaged in “drip pricing” (not disclosing all fees up front) that the FTC already warned hotel companies in 2017.

You can access OAG website for the announcement here.

• The lawsuit claims that Marriott hides these resort, destination or amenity fees from the initial rate search on its own website and those of OTA’s such as Expedia and Priceline.
• Later these fees that are anywhere from $9 to $05 per day are hidden on the “taxes and fees” part of the rate quote implying that they are government mandated.
• It also also unclear on Marriott’s website what these fees cover per the lawsuit.

Marriott is also aware of all these fees charged by the properties as they need to clear them with the company before:

Marriott also exercises control over the resort fees its hotels charge. Marriott’s resort fee policies forbid hotels it owns, manages or franchises from charging resort fees unless the property submits a formal request to charge the fees and obtains Marriott’s approval to charge the fees. Although Marriott’s Franchise Agreements typically allow its franchisees to set their own rates for guest room charges, these franchisees must still comply with Marriott’s resort fee policy, which requires them to obtain Marriott’s approval before they are permitted to charge a resort fee. Moreover, Marriott’s Franchise Agreements prohibit charges or billing practices that Marriott determines are misleading or detrimental, including incremental fees or services that guests would normally expect to be included in the hotel room charge.

Here’s copy of the lawsuit:

Download (PDF, 283KB)

Here’s the announcement from the OAG:

July 9, 2019 OAG Alleges Hotel Chain Deceived Consumers About the True Price of Hotel Rooms in Pursuit of Profits

WASHINGTON, D.C. – Attorney General Karl A. Racine today filed a lawsuit against Marriott International, Inc., a multinational hotel company, for hiding the true price of hotel rooms from consumers and charging hidden resort fees to increase profits. The Office of the Attorney General (OAG) alleges that Marriott’s deceptive and misleading pricing practices and failure to disclose fees harmed consumers and violated the District’s consumer protection laws. OAG’s lawsuit seeks to force Marriott to advertise the true prices of its hotel rooms up-front, provide monetary relief to tens of thousands of harmed District consumers, and pay civil penalties.

“Marriott reaped hundreds of millions of dollars in profit by deceiving consumers about the true price of its hotel rooms,” said AG Racine. “Bait-and-switch advertising and deceptive pricing practices are illegal. With this lawsuit, we are seeking monetary relief for tens of thousands of District consumers who paid hidden resort fees and to force Marriott to be fully transparent about their prices so consumers can make informed decisions when booking hotel rooms.”

Marriott International, Inc., is a Delaware corporation headquartered in Bethesda, Md., and it is one of the largest hotel companies in the world. Marriott owns, manages, and franchises more than 5,700 hotels and 1.1 million hotel rooms in over 110 countries, including at least 29 hotels in the District of Columbia. Marriott offers hotel rooms through its own websites and through other hotel-booking websites like Priceline and Expedia.

As consumers have increasingly turned to hotel-booking sites to comparison shop across brands, the hotel industry has become highly price-competitive. To lure consumers, some hotels advertise daily room rates that are lower than the true total price consumers will have to pay for a room. Then, when consumers book the room, the hotels add mandatory fees, often called “resort fees,” “amenity fees,” or “destination fees” on top of advertised rates. By charging these fees, hotels can increase profits without appearing to raise prices. Over the past decade, Marriott has increased its use of resort fees and reaped hundreds of millions of dollars in additional profits.

In November 2012, the Federal Trade Commission (FTC) warned 22 hotels, including Marriott, that their pricing practices around resort fees may violate federal consumer protection laws by misrepresenting the true price of hotel rooms. In 2017, the FTC’s Bureau of Economics issued a report concluding that “separating mandatory resort fees from posted room rates without first disclosing the total price is likely to harm consumers.”

Marriott has charged resort fees to tens of thousands of District consumers over the years, totaling millions of dollars. OAG alleges that over the past decade, Marriott has violated the District’s Consumer Protection Procedures Act and harmed District consumers by:

Hiding the true price of hotel rooms: Marriott conceals the true total price of hotel rooms by advertising one rate, then charging mandatory “resort fees,” “amenity fees,” or “destination fees” on top of the advertised price. At least 189 Marriott properties worldwide charge these hidden fees, which range from $9 to as much as $95 per room per day, and consumers only find out about these fees after they begin to book a room.

Failing to clearly disclose all booking fees: The room prices Marriott lists on its own website and on third-party hotel-booking sites do not include mandatory resort fees and these fees are not disclosed up front. Consumers do not learn the total price of their hotel rooms until they begin the booking process, and resort fee disclosures are often hidden in obscure areas, confusingly worded, or presented in smaller print than the advertised rates. This leads consumers to believe they will be paying less for a hotel room than the true total cost. It also makes it extremely difficult for consumers to gather all the information they need to compare prices and make informed choices.

Misrepresenting that resort fees are imposed by the government: In many instances, Marriott includes resort fees near the end of a hotel-booking transaction under the heading “Taxes and Fees.” By combining the amounts that consumers were asked to pay for resort fees with their tax payments under a generic heading, Marriott leads consumers to believe the resort fees were government-imposed charges, rather than additional daily charges paid to Marriott.

Misleading consumers about what resort fees actually pay for: In some instances, Marriott makes confusing or contradictory representations about why they are charging resort fees and what services or amenities consumers are actually paying for.

The complaint is available at: https://oag.dc.gov/sites/default/files/2019-07/Marriott-Complaint.pdf

This lawsuit follows an investigation into the hotel industry’s pricing practices by the Attorneys General in all 50 states and the District of Columbia. OAG is seeking a court order to force Marriott to advertise the true prices of its hotel rooms up front, pay restitution to District consumers who paid deceptive resort fees, and pay civil penalties for violating the District’s consumer protection laws.

Conclusion

The lawsuit PDF is worth a read, although we have highlighted the main points and the release from the OAG is comprehensive.

There are several reasons why hotel companies such as Marriott love these, beyond making the headline price look lower that we have covered previously:

1. Charging them on award stays

• Marriott charges these scam fees also on award stays while Hilton and Hyatt won’t.

2. Travel agent commission

• The resort fee part of the rate is non-commisionable for agents.

3. No loyalty program points for the fee

• Loyalty program members won’t earn points for the fee because it is classified as “tax”.

4. Dodging taxes

• Hotels now usually charge the usual lodging taxes in top of the resort fee but that has not and likely still is not always the case depriving municipalities of revenue.

These resort, destination or amenity fees usually include items that already are included in elite benefits or “amenities” that people no longer use like local phone calls.

These fees are not only an issue with Marriott but with all other hotel companies as well and they have been spreading to cities lately as “destination fees”. This practice simple has to end.