Hilton Hit With Lawsuit Over Resort Fees

One of the most annoying trends in the hotel industry is resort fees, destination fees, facility fees… whatever you’d like to call them. Essentially these are added mandatory charges that hotels tack on to the room rate.

Why hotels charge resort fees

Hotels charge these fees for a variety of reasons:

  • They’re a way for hotels to try and get more revenue without increasing the “transparent” room rate
  • It works out better for the hotel than an increase in the room rate, since historically they don’t have to pay travel agents a commission on these fees
  • In some areas it also allows hotels to skirt the typical occupancy tax that otherwise applies on the room rate

Hotels are largely delusional about these fees, and the Hotel Association of New York has stated that guest “appreciate the value offered” by these fees.

While I’m not generally for the government getting involved in everything, I’ve long said that I think it would benefit consumers for the government to at least require hotels to be forced to advertise all-in pricing, just as they require of airlines. I’m not saying hotels shouldn’t be allowed to charge these fees, but rather that they have to be clearly disclosed.

The good news is that we’re seeing more and more progress on this front…

DC Attorney General suing Marriott over resort fees

As I noted a couple of weeks ago, the District of Columbia Attorney General is suing Marriott over their practice of hiding resort fees.

He argues that this practice has harmed consumers, and he wants to force Marriott to advertise the true price for their hotels up-front, and also to provide monetary relief to DC consumers who have been harmed by this policy.

It was interesting that the lawsuit was specific to Marriott, and I was curious if we’d see more of this from other attorney generals and/or for other hotel groups. We now have our answer.

Nebraska Attorney General suing Hilton over resort fees

Nebraska Attorney General Doug Petersen has filed a lawsuit against Hilton, for hiding the true price of hotel rooms from consumers and for charging hidden resort fees.

He argues that Hilton’s deceptive and misleading pricing practices and failure to disclose fees has harmed consumers and violated Nebraska’s protection laws.

The suit seeks to force them to change the way they display prices, as well as provide monetary relief to Nebraska consumers, and pay civil penalties.

As he explains:

“For years, Hilton has misled consumers in Nebraska regarding the true cost of certain Hilton hotel rooms. They failed to heed warnings from the Federal Trade Commission and the mounting complaints from their own customers.”

Bottom line

It looks like things might finally be changing for major hotel groups, as we now have two attorneys general suing two different hotel groups. If this spreads I think hotels will have no choice but to change their practices.

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Ad2 Guest

Along the same lines, another absurd surcharge is "domestic security fee" which used to be known as "9/11 security fee" for rental cars in NJ. This is assessed at $5 per day. Revenue collected goes into a general state fund if you look at the statute. I've emailed state representative a few times but no response or change. It's outright deceptive of that state government. I guess the NJ AG wouldn't fight for that to go away .

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AK Guest

Nebraska Resort = Oxymoron.

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Frank Guest

@globetrotter Operators tend to focus on labor costs because they are variable but variable is not the same as substantial. The land is already bought/leased, the hotel is already built, the rooms are already furnished, the rest of the equipment is installed, this is the real hotel overhead, not labor. While I was working there, MGM almost went bankrupt because they overbuilt with City Center despite the existing hotels making over 300 million dollars/month in EBITDA. Our labor costs including management weren't even 10% of our debt service and debt service is always why a hotel goes bankrupt. Even if we cut labor 10% it was only going to contribute another 1% to cash flow. Hotels always try to cut service and blame labor costs but the problem is always taking on too much debt or overbuilding. The owners either spent too much building or paid too much in acquiring the property.

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KJ Guest

Another issue with resort fees is the fact that IHG for example,don't allow them to be included towards points earned for a stay.In cases where resort fees can be over 30% Of the daily room rate,that is a hefty sum that IHG & Others are denying their elites.In addition Elites already qualify for some of the alleged benefits that Resort Fees are supposed to bring,by virtue of their Elite Status,so clearly the Resort Fee argument that is put forward by hotels ,is fundamentally flawed

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Gene King Guest

I recently stayed at the Carib Royle in Orlando, FL. I was charged $30.00 a night resort fee plus $14.95 a day parking fee. My son flew in and we picked him up and the hotel tried to charge him parking fee and he didn't even have a car.We had a drink in the lobby,a glass of wine and a whiskey and the bill was $36.00 for two drinks. Some of the food areas in this hotel will add a 20% tip and not disclose it to you so you leave another 20% and now the server is getting a 40% Never again will I stay here.

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