Skift Take
Ancillary profits like resort costs is a big business for the travel market, and it is unlikely hotels are going to abandon the practice during the unpredictable pandemic healing– unless they are forced to.
Cameron Sperance
Marriott International made numerous millions of dollars off the much-maligned practice of charging resort fees, just recently unsealed files declare from the Washington, D.C., Attorney general of the United States’s ongoing claim against the company.
D.C. Attorney General Of The United States Karl Racine first sued Marriott in 2019 for hiding the genuine cost of a hotel space through the practice of resort charges, an included price on everyday rates that isn’t initially showed online for what is expected to be services distinct to that property. These costs, even charged on non-resort locations under other names like facility or destination fees, are a market practice owners enjoy as a way to increase earnings and earnings. Guests tend to hate as a bait-and-switch strategy.
Marriott made a minimum of $206 million off the practice just from its self-managed resorts considering that 2012, according to depositions from the continuous suit. The company itself made $17 million from the practice in 2019.
“As alleged in the problem, Marriott is taking advantage of customers by purposely misinforming them about the price of spaces just to increase the company’s bottom line,” a spokesperson from Racine’s workplace said in a declaration. “AG Racine filed this lawsuit due to the fact that of these truths– and now we have them verified by executives at the company and from the information about the 10s of millions of dollars Marriott left resort costs.”
The lawsuit accuses Marriott of keeping these extra fees– which can range from $9 to $95 daily– from the displayed daily rate on its own site along with online travel agency websites like Expedia. Instead, the added fee is noted later in the booking process in an “obscure blue box” or under the taxes and costs section of the rate breakdown. But the most recent documents from the suit likewise expose how Marriott leaders understood how essential it was to continue hiding these costs.
“It would put us at a competitive drawback versus hotels, other hotels, our rivals by doing that,” Jeffrey Wolff, Marriott’s previous vice president of visitor experience and rooms operations, said in a deposition.
Wolff managed the company’s resort charge program from 2010 up until his retirement in 2019, according to the claim.
While Marriott leaders believed rankings in search engine result would suffer as an outcome of disclosing fees, Expedia revealed strategies in late 2019 to reduce a hotel’s rankings if it charged a resort cost. It’s unclear whether Expedia followed through.
Marriott declined to comment for this story, but company leaders have long kept openly that they are very transparent about these charges when visitors go to schedule a hotel stay. There is also a rigorous process that goes into determining what hotels can impose these type of costs, according to previous statements from the business.
“Resort costs tend to be a hot subject because I believe you have actually probably seen there’s been some chatter out there from the (state) attorney generals of the United States about the method they are displayed,” Leeny Oberg, Marriott’s primary monetary officer, said at Skift Global Forum in 2019. “And I’ll advise everyone that we always make sure they are extremely plainly shown prior to you actually reserve a space.”
An audit of Marriott’s resort fee-imposing hotels during the last five months of 2015, 4 years prior to Oberg’s statement, revealed just 67 percent of those homes were disclosing the fee at the time of booking.
The unsealed files reveal Marriott does have a vetting procedure for hotels looking to add on resort or destination charges, however the business hardly ever punishes hotels for failing to abide by rules like divulging the fee at the time of booking.
Hotels were “permitted to continue charging resort and location fees if … they have not been adhering to the disclosures,” Wolff stated in his deposition.
Just one hotel was ever flagged for a possible withdrawing of its capability to charge among these fees, according to the deposition of Scott McCoy, Marriott’s present vice president of operations and visitor experience and who manages resort costs.
A Swelling Surcharge
Resort charge income ballooned from their name leisure homes and into non-resort locations, in part since Marriott has a dirty definition of what does and doesn’t qualify under these charges, according to internal e-mails acquired in the claim. This is when resort charges started to appear under other names like “location feature cost.”
The guidance, per a 2014 memo from Wolff, is that the charge should consist of a package of products and services that would not normally be included in the cost of the room. A location amenity fee at the Renaissance Las Vegas Hotel included things like complimentary play at a regional casino, and a bourbon and white wine tasting, according to the claim.
But other destination costs appeared to swelling in services that would typically be considered part of that hotel’s routine brand name requirement like gym gain access to and parking. One of the motivating elements to release destination costs seems discovering a method to recover lost income from web access, a service visitors once spent for but has given that become totally free at different speed levels.
Marriott isn’t the only company to deploy this practice or come under fire for it, either.
A sample reservation at a few of Accor’s Fairmont hotels Wednesday reveal an “urban experience fee” for a few of the business’s city hotels not consisted of in the advertised rate. The Nebraska attorney general’s lawsuit submitted a claim versus Hilton’s resort charge practices in 2019 similar to the D.C. case against Marriott’s.
Ruled by Online Search Engine
The Federal Trade Commission initially warned 22 hotels and resorts in 2012 about resort charges and what the organization viewed as rate misstatement versus customers. Marriott-owned hotels became part of that initial group, the lawsuit declares. The FTC followed up again 5 years later with a study showing consumer harm caused by the resort costs.
The hotel industry’s decision to keep up with the practice instead of heed the government’s caution appears to boil down to Google and Expedia rankings weighing more than any possible crackdown on hotel additional charges.
The American Hotel & Lodging Association, the hotel market’s largest trade group, in 2018 sent comments to the FTC noting “search is vitally important to how consumers book hotel spaces.”
However the company likewise appeared to recognize the importance of openness, openly a minimum of, with another claim: “The order of search engine result is necessary to consumers, and customers expect default search engine result to be objective.”