Washington DC- Today, U.S. Senator Bob Casey (D-PA) announced that he has sent a letter to the Federal Trade Commission (FTC) asking the agency to require hotels to disclose ‘tail-end’ fees up front. With summer vacation season in full swing, families in Pennsylvania and across the nation are seeing hotels advertised online for one rate only to see the full charge substantially increase as they complete the booking process–a practice known as ‘drip pricing.’ Listing the lower rate allows hotels to be competitive on major search engines and travel sites where millions of families are booking their vacations. Though the FTC warned some hotels about the practice in 2012, it still persists.
“Families across Pennsylvania and the nation save all year for a summer vacation. They shouldn’t have to guess at the price of their hotel,” Senator Casey said. “The FTC should take appropriate steps to end drip-pricing and ensure these fees are disclosed up front. Millions of Americans are now booking hotels online and they should have an accurate sense of what the cost will be.’
The full text of Senator Casey’s letter can be seen below
July 6, 2015
Ms. Mary K. Engle
Division of Advertising Practices
Federal Trade Commission
600 Pennsylvania Avenue, NW
Washington, D.C. 20580
Dear Director Engle,
I write to express my concerns with so-called “drip pricing” in the hotel industry. As a result of this pricing scheme, American consumers are at risk of paying substantial resort fees hidden to the public eye in securing their travel accommodations. This practice is misleading and unfair to the many Americans who book hotel rooms online.
Instead of advertising base rates that reflect the real prices paid by consumers, hotels are charging “tail-end” fees, which do not appear until the reservation transaction is near completion. These practices mask the true cost of hotel stays and merely aid hotels in optimizing their placement in search engine results. This hinders the consumer’s ability to make a complete, informed decision in choosing the right hotel. In addition, such practices that misrepresent the hotel room reservation price quoted to consumers may be in violation of federal law that governs deceptive commercial practices.
For some time, consumer advocates and members of the public have called for improvements in advertising regulations to require resort fees—such as charges for newspapers, onsite exercise facilities, Internet access and other amenities—to be clearly disclosed throughout the shopping and reservation process. While I applaud the Commission’s previous actions calling for several companies to review their websites to ensure proper representation of the total reservation price paid by consumers, some companies have continued to engage in misleading advertising practices. American consumers deserve a higher industry standard in this regard.
Given the size of the hotel industry and the wide range of consumers affected by these pricing tactics, I strongly encourage you to take action regarding drip pricing. In particular, I encourage the Commission to consider strengthening advertising standards to better serve the public in making well-informed decisions regarding their hotel stays and to prevent behavior that misleads middle-class families.
Robert P. Casey, Jr.
United States Senator