Hotel Industry Alert: Drip Pricing and Rate Transparency

Posted by Lauren S. Frisch on

In recent years, drip pricing has become a hot topic in the lodging industry. You may not know what it is, but chances are that you’ve experienced it.  It often happens like this: you pick the perfect destination and find a great hotel deal, but when you go to book it, that great deal, which now includes additional fees suddenly isn’t so great.  What happened? The answer may be an unfair and deceptive practice known as drip pricing.

What is Drip Pricing?

Drip pricing occurs when a company advertises a low daily room rate to attract customers; then, during the buying process, it adds on one or more additional fees such as “resort,” “amenities,” or “facilities” fees.  The issue is not the fee itself—which often go toward internet access, access to the swimming pool or gym, parking or shuttle services—but the failure to clearly and transparently disclose the fee as part of the advertised room rate.  Hotels that persist with this practice may gain many new customers in the short term, but they will struggle to attract repeat customers in the long-term and may be subject to lawsuits and investigations by the consumer protection division of one or more states’ Attorneys General.

D.C. Attorney General Karl Racine recently filed a lawsuit in the Superior Court of the District of Columbia alleging that a major hotel chain did not include its resort fees in the daily room rates advertised to customers.  This lawsuit did not result from an isolated investigation.  Rather, it is the first lawsuit to come out of a much larger, multistate task force that has been investigating potentially deceptive pricing practices in the hotel industry since 2016.

Tips

If you are booking a hotel room, make sure to read every page of the booking site you use—whether it is the hotel’s website or a third-party page such as Booking.com or Priceline, to ensure that you understand the full price (including any fees) prior to booking.  

If you are a hotel owner, consider implementing one of the following strategies to ensure your prices are clear and transparent:

  • Bundle all fees into a single, advertised room rate;
  • List the components of the advertised room rate separately, with the total room rate as the most prominently disclosed price; or
  • Offer unbundled, optional resort services, which would not be included in the advertised room rate.

If you would like additional guidance on transparent pricing practices, or if you have any other questions, please contact me at lfrisch@bfvlaw.com.