History quickly repeats itself over and over when it comes to resort fee lawsuits.
Texas Attorney General Ken Paxton sued Hilton this week over resort fees and what he alleges is that the company “misleadingly charges consumers higher prices than initially advertised” and that “services allegedly funded by fees are often free or included.” at the room rate at other-resort locations.”
The latest lawsuit arrived shortly after Paxton filed a similar lawsuit against Hyatt over its resort fee practices and settled with Marriott over similar charges. Marriott now includes the Resort Fee in the tentatively determined room rate per night on its reservation platform.
“Rising inflation and worsening economic conditions have made protecting Americans from predatory and illegal corporate practices an even more urgent priority,” Paxton said in a prepared statement.
“Many major hotel chains, including Hilton, have been defrauding their customers for far too long. These companies have warned they will face consequences for this behavior, and Texas has taken aggressive action to protect consumers, promote price transparency in the hotel and travel industries, and make sure businesses that Our laws violate the responsibility to mislead the public.”
Texas AG alleges that Hilton does not adequately display the surcharge on the nightly rate and charges guests twice: first as the fee itself and then again with taxes on the fee. It also comes amid increasing political pressure on travel companies to be more transparent with additional fees.
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The hotel offered a $193 nightly rate earlier this month, but then added a $27.26 “mandatory daily fee” that includes Wi-Fi, gym access, a spa discount, breakfast for the kids, and two bottles of water in the room. Keep in mind: Hilton Honors Silver status or higher recipients already receive free water as part of their loyalty status.
The Hilton Anatole also charged a “Texas refund fee” for an unspecified amount, according to Paxton’s lawsuit. The “mandatory daily fee” alone added over 14% to the nightly room rate, which ended up being $258.46 after adding fees and taxes.
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Had the 1,606-room hotel been sold every night for a year, the Texas AG lawsuit indicates the ownership group would have made more than $16 million in additional fees.
The suit also highlights Woodlands Resort, a Curio Collection hotel outside of Houston, and C. Baldwin, a Curio Collection hotel in Houston, as other examples of hotels in the state that charge extra under monikers like “Daily Resort Charge” and “Daily Mandatory Charge.”
The lawsuit also accuses Hampton Inn & Suites San Antonio Riverwalk, Hampton Inn & Suites Dallas Downtown, and Homewood Suites by Hilton Dallas Downtown of charging twice, first as a fee and then again as a tax — a practice with potential. To make each hotel over $100,000 annually.
“While decisions about mandatory fees are made by ownership and management at the property level, these fees are always fully disclosed when booking through Hilton channels, and we encourage all third-party distribution partners to disclose any fees when advertising our inventory,” a Hilton spokesperson said. he said in a statement to TPG. “We have long been committed to ensuring full disclosure of any fees charged by hotels in our system and will continue to review this issue closely to ensure consistency to customers when displaying our rates through the booking channels.”
Resort fees are not going away
The insidious practice of charging resort fees will almost certainly not go away, but it is very likely that it will become more transparent.
Marriott never admitted guilt in its settlement, and the company’s leaders always maintained the surcharges noted throughout the reservation process. You will see a blue box during the reservation process indicating the fees added on the Marriott reservations system. Hilton and Hyatt write down their extra fees during the reservation process, but it’s not enough in the eyes of the Texas attorney general.
Further, the lawsuit continues to note that Hilton charged the fees and characterize them as going toward amenities that were not accessible or open during the pandemic.
The lawsuit states, “Hilton relies on consumers who don’t notice or tire too much in the search process to cancel the transaction.” “Although the fee was eventually disclosed, the final disclosure does not address the deception in the initial advertised price.”
While Marriott’s new practice of bundling resort fees into the initially set price may sound like potential industry practice, the company’s CEO earlier this month wasn’t willing to speak up for his rivals.
“It’s not like those were masked in some way. We’re simply articulating and enhancing that transparency. I’ll leave it to the state,” he said on the company’s first-quarter earnings call. [attorneys general] across the country to the rest of the industry. But I am pleased that we will lead the industry in terms of transparency in disclosing information to our guests.”
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