Consumers enjoyed what is at least a small win last week. In response to a petition brought by the Pennsylvania attorney general, Marriott International agreed not to misrepresent room rates, mandatory fees, or total price in its advertising. Basically, Marriott agreed not to engage in deceptively featuring low-ball room rates, with mandatory fees added later. Although this agreement at least nudges a major hotel away from an ongoing deceptive practice, its effect on the widespread industry practice is yet to be determined — and will likely be small.
The Issue. The key issue here is a deception practiced by thousands of hotels, especially in the U.S. and nearby vacation destinations. Instead of posting the real price of a room from the outset, they carve out a portion of the rate as a "resort" or other mandatory fee and post the remainder as the "base rate," both on their own websites and on the rates they give to online travel agents (OTA) such as Booking.com and metasearch systems such as Kayak.
The Deception. Many travelers see only these low-ball pre-fee figures when they compare hotel prices. Regardless of channel, the fees are added back before the final purchase, so hotels can claim they aren't "hidden." But they are hidden during an initial rate search, and they're often hidden in other advertising. The Big OTAs and metasearch systems are pretty good about adding small-print notifications pretty early about fees to be paid later, but other advertisers do not. For example, I regularly receive promotional emails from tour packagers promoting spectacular hotel "deals" such as Las Vegas for $17 a night, with no footnote or other indication that after the mandatory fee, the real price is $38, not $17.
This practice is clearly deceptive. It is designed to be deceptive — to lead consumers into choosing a more expensive hotel than they might otherwise have chosen. The Federal Trade Commission has specifically identified it as deceptive, and sent out a letter saying so. But beyond that letter, and despite its mandate to protect the public from deceptive advertising, the FTC has done nothing further to stop the deception.
What the Agreement Does. Marriott promises to display all-up fee-inclusive rates most prominently on its websites and other price promotions. Specifically, price searches on Marriott websites will be based on total; price, inclusive of mandatory fees. The agreement applies to all owned, franchised or other Marriott affiliates. The agreement also calls for Marriott to provide all relevant information in the rates it submits to affiliated OTAs and metasearch systems. That's certainly a plus.
What the Agreement Lacks. Unfortunately, the agreement contains two big gaps in consumer protection where the agreement fails:
• It legitimizes the false claims that the mandatory fees apply to specific services. And that's not true: Hotels traditionally list services the fees supposedly cover: swimming pool, gym, Wi-Fi, and such. But as long as a fee is mandatory, what the hotel says it covers is meaningless. Sadly, the agreement appears to accept and legitimize this fiction.
• It places no obligation on third-parties such as OTAs and metasearch systems to display only Marriott's full, fee-inclusive rates. Marriott may provide those rates, but Marriott won't require third parties use to show only honest all-up rates in their own comparisons. To anyone using a non-Marriott search system for rate comparisons, as far as I can see, it will remain "business as usual" and therefore "deception as usual" comparisons.
What's Next. To me, the key to getting rid of the deception is third-party compliance. Instead of going after additional hotel chains, I would hope that the attorneys general looking at the problem next target a big OTA or metasearch system. I've been personally surprised that other than just the single system, Kayak, no big system has promoted "honest hotel price comparisons." To me, that should be a winner. But apparently the bigger guys might need a legal kick in the butt finally to "do the right thing." Consumers got a win, but it ain't over yet.