Hilton Sued For Charging Deceptive Resort Fees by Attorney General of Nebraska

The war against mandatory resort fees heats up even further.

A lawsuit was filed against Hilton Dopco, Incorporated yesterday, Tuesday, July 23, 2019 by Doug Peterson, who is the current attorney general of the state of Nebraska and claims that the multinational lodging corporation purposely both hid the true price of hotel rooms from consumers and charged hidden mandatory resort fees for the purpose of increasing profits.

Hilton Sued For Charging Deceptive Resort Fees by Attorney General of Nebraska

This lawsuit follows an investigation into the pricing practices of the lodging industry by the attorneys general in all 50 states and the District of Columbia.

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

Peterson claims that a minimum of “78 Hilton properties in the United States currently charge these hidden fees, which range from $15.00 to as much as $45.00 per room per night, and consumers only find out about these fees after they begin to book a room.” He also claims that hotel and resort properties which charged the mandatory resort fee as a percentage of the room rate instead of as a “flat resort fee” charged between 14 percent and 20 percent of the room rate.

According to this official complaint — which is available in .pdf or Portable Document Format — Hilton has charged mandatory resort fees to hundreds of consumers in the state of Nebraska since 2012. The office of the attorney general of the state of Nebraska alleges that Hilton Dopco, Incorporated has violated consumer protection laws and harmed hundreds of consumers by:

  • Hiding the true price of hotel rooms: Hilton conceals the true total price of hotel rooms by advertising one rate, then charging mandatory “resort fees,” “daily mandatory charges,” or “urban destination fees” on top of the advertised price.
  • Failing to clearly disclose all booking fees: The room prices Hilton lists on its own website do not include mandatory resort fees and these fees are not disclosed up front. Consumers do not learn the total price of their hotel rooms until they begin the booking process, and resort fee disclosures are often hidden in obscure areas, confusingly worded, or presented in smaller print than the advertised rates. This leads consumers to believe they will be paying less for a hotel room than the true total cost. It also makes it extremely difficult for consumers to gather all the information they need to compare prices and make informed choices.
  • Misleading consumers about what resort fees actually pay for: In some instances, Hilton makes confusing or contradictory representations about why they are charging resort fees and what services or amenities consumers are actually paying for.

Marriott International, Incorporated Sued by Attorney General of District of Columbia

This lawsuit by the attorney general of the state of Nebraska follows the lead of the office of the attorney general of the District of Columbia, which sought a court order on Tuesday, July 9, 2019 to force Marriott International, Incorporated to advertise the true prices of its hotel rooms up front; pay restitution to consumers in the District of Columbia who paid deceptive mandatory resort fees; and pay civil penalties for allegedly violating the Consumer Protection Procedures Act of the District of Columbia.

Arne Sorenson — who is the current president and chief executive officer of Marriott International, Incorporated — defended mandatory resort fees in general and implied that they would be here to stay, claiming that the “food and beverage credit which is often equal to — sometimes a little bit more — than the fee itself” when talking about offering customers “a multiple of the cost of the fee” in terms of packages. Sorenson also compared mandatory resort fees which are charged by lodging companies to baggage fees charged by airlines.

Past Unsuccessful Legal Attempts in Fighting Mandatory Resort Fees

Claire McCaskill wrote this letter on Thursday, July 16, 2015 to Edith Ramirez — who is now the former chairwoman of the Federal Trade Commission — in a failed effort to encourage the government agency to put an end to the practice of mandatory resort fees in the lodging industry using its existing broad authority to prevent unfair and deceptive advertising. Inaction from the agency prompted McCaskill — who was a Democratic senator of the United States who represented the state of Missouri and a former chairwoman of the Subcommittee on Consumer Protection, Product Safety, Insurance, and Data Security — to introduce legislation prohibiting management of hotel and resort properties from charging resort fees on Friday, February 26, 2016 specifically designed to be initially hidden from the consumer; requiring disclosure of said resort fees; and include the full cost of a stay in the room rate.

I reported in this in-depth article on Wednesday, November 28, 2012 pertaining to the proliferation of resort fees when the Federal Trade Commission of the United States finally announced that it was taking action against the practice of hotel properties — including those of Marriott International, Incorporated — to charge undisclosed mandatory resort fees to its guests.

As a result of its investigation, the Federal Trade Commission — a division of the United States government charged with protecting the American consumer — had warned 22 hotel operators that their Internet reservation web sites may violate the law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms. “Consumers are entitled to know in advance the total cost of their hotel stays,” said Jon Leibowitz — then the chairman of the Federal Trade Commission — in this release by the Federal Trade Commission, at which a copy of the warning letter in portable document format is included. “So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’ fees, are anything but convenient, and businesses that hide them are doing a huge disservice to American consumers.”

The Bureau of Consumer Protection of the Federal Trade Commission of the United States issued this report on Thursday, January 5, 2017 which concluded that “separating mandatory resort fees from posted room rates without first disclosing the total price is likely to harm consumers.”

Unfortunately, neither lawsuits nor petitions nor boycotts nor intervention by the Federal Trade Commission of the United States have helped to control the proliferation of mandatory resort fees — at least, not yet, anyway.

Readers of The Gate Already Reporting Successfully Reclaiming Resort Fees They Paid

As I originally wrote in this article pertaining to how to reclaim the mandatory resort fees hotel guests were forced to pay on Sunday, June 16, 2019, “You only need to spend as few as 60 seconds worth of your time and effort to likely reclaim the mandatory resort fees which you paid when you stayed at a hotel or resort property which had the audacity to charge them.” Simply contact the attorney general in the jurisdiction in which you reside or the jurisdiction in which the mandatory resort fee was charged. Links to the attorneys general is included in the aforementioned article for your convenience; but whether or not only customers who are based in the United States can qualify to place the request — as well as a sample letter for best results — has not yet been included in that article.

According to this comment posted by Ollie — who is a reader of The Gate — success in reclaiming a paid mandatory resort fee was relatively fast and easy: “Wow. That was quick. I received a call from the hotel today (that’s within seven days of filing!) offering a refund. I’m very impressed this worked. I told her I was grateful, but that the main reason I filed was to protest against the industry practice of resort fees. It sounded like I wasn’t the first person to say this. Hopefully enough people will do this to make a difference in their practices. Thanks again Brian for suggesting this.”

Similar success of reclaiming a paid mandatory resort fee was achieved by Mike, who is also a reader of The Gate: “I just did this recently and successfully got $100 back for 2 nights at the Venetian.”

If you have been forced to pay mandatory resort fees at a hotel or resort property, please refer to this article pertaining to how you can possible reclaim that money.

What Hotel Properties Should Do With Resort Fees

Resort fees which are charged by lodging companies should be optional rather than mandatory.

In fact, a hotel or resort property can be creative with marketing extra products and services. How about customers either choosing from several packages or selecting items to build their own packages, of which they would be more than happy and willing to pay the extra money?

Either way, those packages must contain items of value — not a newspaper which the guest must fetch at the front desk, or local calls using the telephone in the room.

That would be so simple and present a win-win situation for both the consumer and the hotel or resort property — but then, ensuring that the resort fee was optional instead of mandatory removes the ability to advertise a falsely deceiving lower room rate while simultaneously denying paying some of the commission to online travel agencies which send business their way.

Summary

The office of the attorney general of the state of Nebraska included the following two paragraphs in its aforementioned official press release:

Hilton Dopco, Inc., also known as Hilton Domestic Operating Company, Inc., is a Delaware corporation headquartered in McLean, Virginia, and is one of the largest hotel companies in the world. Hilton owns, manages, and franchises approximately 5,700 hotels and approximately 923,000 hotel rooms in 113 countries and territories. Hilton offers hotel rooms through its own website and through other hotel booking websites like Priceline and Expedia.

As consumers have increasingly turned to hotel booking sites to comparison shop across brands, the hotel industry has become highly price-competitive. To lure consumers, some hotels advertise daily room rates that are lower than the true total price consumers will have to pay for a room. Then, when consumers book the room, the hotels add mandatory fees, often called “resort fees,” “daily mandatory charges,” or “urban destination fees” on top of advertised rates. By charging these fees, Hilton increased profits without appearing to raise prices.

I personally hope that the attorneys general in the 50 states and territories in the United States follow the lead of the office of the attorney general of the District of Columbia and also take action against the lodging companies which have shamelessly engaged in this nefarious practice for years. No matter how euphemistically they are marketed or explained, mandatory resort fees and their brethren are simply deceptive at best to consumers who are price conscious and seeking value for the money they pay to stay in a hotel room. Mandatory resort fees thwarts the efforts of consumers to truly compare room rates between competing hotel and resort properties.

Expect more lawsuits pertaining to mandatory resort fees to be filed by additional attorneys general against Marriott International, Incorporated; Hilton; and other lodging companies.

That I vehemently oppose the implementation of mandatory resort fees, facilities fees and now destination fees is no secret to you if you have been a reader of The Gate for years — they should either be optional or eliminated altogether — and I will just let this extensive body of work over the years pertaining to mandatory resort fees speak for me…

Photograph ©2018 by Brian Cohen.

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