Mark Pestronk
Q: Given consumers' increasing taste for high-end hotels and resorts, our agency is about to roll out a direct-mail campaign featuring packages that include air and luxury lodging. I know the DOT has an airfare advertising rule that requires that all taxes and fees be included in the advertised price. Does the federal government have a similar rule for hotels and resorts? Does it matter whether the hotel or resort is in the U.S. or abroad? If the hotel and airfare advertising rules are different, which one applies to a package that includes both?
A: The airfare price advertising rule of the DOT and the lodging price advertising rule of the Federal Trade Commission (FTC) are similar, but there are important differences. Both are designed to protect U.S. consumers from misleading advertising, including hidden fees.
The DOT's rule is stricter. It requires that all written and oral solicitations and quotes must start with the total price, stated as one amount, that includes all mandatory fees and all taxes. The total price must even include the travel agency's transaction or service fee, if it is mandatory. Finally, in a written solicitation, the total price must be more prominent than any breakdown.
After quoting the total price, you may break down the price into the total airfare price and total transaction or service, but you do not have to do so under the DOT rule. Ironically, the American Airlines addendum to the ARC agreement requires that you clearly distinguish between the fare and your fee in all quotes. The only way to reconcile the two requirements is to quote the total price as one amount and then to break it into total fare and fee.
The FTC rule, which covers lodging and event tickets, does not require that you quote or advertise the total price including all taxes. The total price must include all mandatory fees, such as resort fees and your agency's fee, if any. As with the DOT airfare rule, the total price must be displayed more prominently than any breakdown.
Although you don't have to include taxes in the total price quoted, they must still be disclosed clearly and conspicuously before payment is taken in a manner that explains their nature. Even small taxes that are not collected until checkout must be disclosed.
Interestingly, the rule does not prohibit any particular kind of mandatory fee, such as separate cleaning or in-room safe fee, as long as it is included in the total price quoted. Of course, fees for optional services, such as a late-checkout fee, don't need to be disclosed.
It doesn't matter where on Earth the hotel or resort is located, as the FTC rule applies when advertising or quoting to U.S. consumers. Finally, the rule applies no matter whether the advertiser is located in the States or abroad.
For packages that include both air and nonair as mandatory components, the stricter DOT rule applies, which means that you must include taxes in the total price that is displayed more prominently than any breakdown.