Omni Hotels Corporation, its management arm, and TRT Development Company are staring down a proposed class action lawsuit. Filed in California, the suit alleges the hotel operators have induced and misled consumers into booking rooms by advertising low prices and then later tacking on an undisclosed “resort fee.” Although this resort fee is mandatory, the fact that it is hidden allows the defendants to advertise rooms in California at lower prices, a tactic that serves no purpose “other than to deceive consumers,” the suit says.
“Just as a hotel could not tout a low room rate, then charge extra for the use of a bed after the guest arrived, it cannot exclude a mandatory fee for the use of a room from the room rate,” the case argues.
The case defines a resort fee as a charge added on to the actual cost of staying in a hotel room. Resort fees supposedly cover all sorts of amenities, the suit says, but are almost always required even if a consumer chooses not to utilize the hotel’s services, which may include, for instance, towel service at a resort pool. Resort fees are often disclosedafterthe price of a room is displayed, the lawsuit says, as part of a practice called “drip pricing” whereby companies advertise only part of a product’s price and wait until further along in the transaction process to reveal other charges. “Drip pricing,” the suit goes on, is shown to have a great effect on customers – and can cause them to spend more than intended or even buy a product or service they simply do not want. From the suit:
“This shows that ‘drip pricing’ confuses consumers and deceptively influences them into believing that the price they are paying is not as high as it actually is. The lower ‘base’ price leads to lower price perception and in turn leads to higher demand for the drip priced product/service over comparable products/services that have all fees and costs disclosed from the beginning.”
All told, consumers subjected to “drip pricing” will more often than not value a hotel room at its initially disclosed, artificially low rate, according to the lawsuit. Moreover, drip pricing has competition-suppressing effects as well, as the case adds companies that serve accurate prices up front are at a disadvantage to those who use “drip prices” to dupe consumers.