Mark Pestronk
Q: I have two resort-fee questions that I have been wondering about. First, when we book a hotel that has resort fees, some of which are quite hefty, do we have to quote the hotel rate at a price that includes the fee, like we do in the case of airline tickets? Second, if we don't have to do so, do we have to disclose the fee at all as part of the sales process?
A: As you know, for airline reservations, both carriers and agents are required by Department of Transportation regulations to include all mandatory fees in the total price, which must be stated first before any breakdown, and when advertised the total price must be more prominent than any breakdown. The DOT rule also applies to packages that include air as a mandatory component, so you would violate the rule if you quoted an air-hotel package without the resort fee included in the total price.
There is no equivalent regulation for hotel reservations that are not part of a package that includes air. The DOT has no jurisdiction over such sales.
The Federal Trade Commission, which has jurisdiction over hotel-only sales as well as sales of packages that include hotels only as an option, has declined to require inclusion of the resort fee in the price quoted. This policy was reiterated most recently in July. Therefore, you, as agent for the hotels, are not required to do so.
However, there is less difference here than meets the eye.
The FTC does require that you disclose the resort fee at some point during the sale process. In 2012, the FTC issued warnings to 22 hotel companies in 2012, saying that surprising guests with hidden resort fees is deceptive practice in violation of the Federal Trade Commission Act of 1914.
The FTC's letters went on to state something very similar to the DOT rule, "While a hotel reservation site may break down the components of the reservation estimate (e.g., room rate, estimated taxes and any mandatory, unavoidable fees), the most prominent figure for consumers should be the total inclusive estimate."
So, what is the actual difference between the DOT rule and the FTC policy? The DOT requires that you include the total price first and most prominently, whereas the FTC requires that you include the total hotel price (with the fee) as the "most prominent figure," though not necessarily first. Also, the DOT rule applies to any written or oral quote or advertisement, but the FTC policy appears to apply only to online quotes.
More importantly, the DOT has fined travel agencies tens of thousands of dollars for violations of the full-price rule, whereas the FTC has yet to try to fine any agency or hotel. This sort of interagency divergence is not uncommon in Washington, as each government agency has its own enforcement priorities.
Even if you do not face a risk of being fined by the federal government for failing to disclose resort fees in your in-person, telephone, email or online sales, a client could probably successfully sue your agency for consumer fraud if you don't disclose the fee before the sale is complete. Every state has a consumer protection law, and judges are usually free to decide what constitutes an illegal practice in every suit alleging a violation of that law.