Travel in 2013: Will Hotels Finally Start Advertising Honest Prices?

Honest price advertising will be the main hotel question mark in 2013. As I’ve reported, the Federal Trade Commission informed big chains that their practice of posting low-ball rates, then adding mandatory “resort” and other fees is deceptive. Instead, the FTC told them they must include whatever mandatory charges they assess in the first price they post, both on their own websites and on prices they give to the online travel agencies. This could be a major gain for consumers: The Department of Transportation previously took action against airlines, and the Florida attorney general quashed a similar practice by cruise lines.

So far, however, I’ve seen no action, either compliance by hotels or enforcement from the FTC. When I checked last week, I couldn’t find any hotels that are complying. At best, they’re noting that, in the words of one, a daily “enhancement fee” will be added before you complete the booking process. But that’s not good enough: The idea, as noted by the FTC, is to make sure the first price figure you see will reflect what you have to pay, all-up, not just advise you that a fee will be coming. All-up prices are an absolute requirement for accurate price comparisons, and a situation where some hotels add fees as high as $25 or even $30 a day while others do not totally distorts any meaningful comparison.

The lack of any official hotel industry response to the FTC is spooky. So far, I’ve seen nothing from any of the big chains or any of the trade associations, either to promise compliance or to oppose the FTC. Weird. And I’ve seen no follow-up or enforcement action by FTC, either.

If we assume the best—that hotels will comply in a meaningful way—you may see some price increases. After all, a Las Vegas hotel that posts a low-ball room rate as cheap as $30 a night really needs that mandatory extra $10 or more as part of its take. It’s a foregone conclusion that if hotels switched all of the extras they claim those fees support from mandatory to optional, lots of guests would not pay for some or all of those options. On the other hand, competitive pressures may well dictate that some of the services nominally included in those extra fees—at a minimum, daily housekeeping services, “free” WiFi, and airport shuttle service—must be included in the base rates. Accordingly, some modest price increases seem to be inevitable among the many hotels that rely on those fees. On the other hand, if we assume the worst—that the FTC action will not be effective—you can look for more hotels to adopt the pricing strategy of low-ball first price displays followed by mandatory fees.

That scam, now prevalent mainly in resort destinations such as Hawaii and Las Vegas, would likely be adopted widely in other areas. After all, they have to look competitive in price comparisons, and if some hotels are lying about their rates, others may feel forced to copy.

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Mandatory fees are, of course, a lie: Regardless of what hotels say they cover, they’re actually part of the price.

But those fees aren’t the only lies you see. In recent years, I’ve pointed out that you can often get some really good hotel deals through the handful of big “flash sale” or “private sale” programs. And they post their own prices accurately—although they often do include the resort fee scam. The lies you see are in those “regularly” comparative rates they post. Last December, for example, for the first two listings I checked, “discount” prices on Groupon were higher than rates available to anybody through Expedia or Hotels.com.

One other perennial hotel scam you have to watch out for is pricing at half the actual cost, “per person,” rather than per room. As always, beware!

Ed Perkins Seniors on the Go is copyright (c) 2012 Tribune Media Services, Inc.

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