Hotel Fees Under a Legal Microscope

Author: David McMillin       

hotel fees

Resort fees like those at issue in a current lawsuit against Marriott are common at every major and boutique hotel brand.

As members of the events industry continue to discuss what motivates attendees to book inside a hotel room block, Washington, D.C. Attorney General Karl Racine has been focusing a different aspect of the hospitality industry: fees. On July 9, Racine filed a lawsuit against Marriott that alleges the hotelier “has used an unlawful trade practice called ‘drip pricing’” for the past decade that has “misled [consumers] into believing a Marriott hotel room is cheaper than it actually is.” The lawsuit centers on resort fees, destination fees, and amenity fees — and while they may go by different names, they add up to the same thing: a higher bill at check-out. Marriott might be named in the suit, but the fees can be found on check-out folios at every major brand and boutique properties as well.

Resort fees in places like Las Vegas have been common for years, but Michael Howe, executive vice president of housing provider onPeak, told Convene that he has noticed an increase in the number of properties charging the fees in urban business centers including New York and Chicago. Leisure guests and solo business travelers may have no other option than to pay them, but it’s a different story with group business, Howe said, where planners have more negotiating power.

“Every hotel contract is negotiable,” said Howe, whose company books more than four million room nights each year. “That negotiation includes the average daily rate, amenities included, and also the resort fee — whether it is included, discounted, or waived.”

John S. Foster, Esq., CHME, attorney and counselor at law, told Convene that he has been “battling openly disclosed ‘mandatory service fees’ or ‘mandatory resort fees’ in group contracts for years.” Foster said he amends contracts to include language that reads “the hotel will not make agreeing to a mandatory fee a condition of checking into the hotel.” While he has gotten pushback in the negotiation process, he said the “strategy is successful a high percentage of the time.”

Foster said that he expects that Marriott will pay to settle the lawsuit, calling it “a dollars and sense issue” that he expects to be closed sometime in the next six months. “Marriott doesn’t want this to go to trial,” Foster said. “There’s no advantage to dragging it out. In a lot of lawsuits, it’s a matter of gathering evidence to discover what the weaknesses [in the case] are, but there is no mystery to the evidence here.”

Indeed, this isn’t a question of whether Marriott is charging the fees. Marriott CEO Arne Sorenson told LinkedIn editor-in-chief Dan Roth in a video interview after the lawsuit was publicized that the company aims to bundle a range of services and expenses together to provide value whenever these fees are charged.

“Our approach generally, for each hotel, is to have a package of things included at each hotel that is a multiple of the cost of the fee,” Sorenson said in the interview. “At many hotels, that may include food and beverage credit, which is equal to or even more than the resort fee. I think a lot of folks look at that and say philosophically, ‘Yeah, I can understand it. I might not have asked Marriott to charge me that, but I can understand why it’s happening.’”

Howe attributed the growing fee situation to a hyper-competitive marketplace — new properties with in-room smart speakers, faster Wi-Fi, updated meeting spaces, and new rooftop bars force their peers to invest more. “These hotels are under huge pressure to continually make their product more relevant and to invest in updates and renovations,” Howe said. “From that perspective, I understand the fees. These just needs to be something that the guest feels like they’re getting in return for paying them.”

Those fees are likely to continue — even in the wake of a potential settlement in the Washington, D.C. case. While Foster believes that “Marriott and presumably other hotels will start making it clearer that there are additional fees so that the consumer can ascertain that [information] before they arrive,” he doesn’t expect the hotel industry to do away with these fees altogether. “I don’t think the practice is going to go away until and unless some other prominent chain gets rid of it and makes it a competitive issue,” he said. “And I doubt that’s going to happen because they make so much money doing it.”

David McMillin is a Convene associate editor.