Curtain Drawn on Marriott’s $ 100 Million ‘Living Expense’ Program – NBC10 Philadelphia


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Recently unsealed depositions have revealed how Marriott International was able to generate hundreds of millions of dollars in additional revenue by adding mandatory resort fees when paying online, after announcing lower initial prices for customers looking for hotel rooms.

The cases are part of a two-year court battle between District of Columbia Attorney General Karl Racine and Marriott, one of the world’s largest hotel companies. Racine filed a civil action in 2019 against Marriott, claiming the company tricked consumers with bait-and-swap tactics that raised room rates announced after the addition of “resort”, “destination” fees. And poorly disclosed “amenity”.

Depositions from current and former executives revealed that Marriott was approaching $ 100 million a year in annual resort fee revenue by 2014, details Marriott attorneys have fought unsuccessfully to keep it sealed.

The trial

The hotel chain has denied cheating on consumers, pointing to the last page of its three-page checkout sequence, where guests can see the total price, including taxes and fees, that will be charged to them before they complete their payment.

Courtesy of the District of Columbia Superior Court

Third step in Marriott’s payment process.

Customers booking through the Marriott website will also see a small blue disclosure about the resort fee on the second page of the payment sequence.

marriott hidden destination amenity fee

Courtesy of the District of Columbia Superior Court.

Second step of Marriott’s payment process.

However, in a summary judgment motion filed Aug. 31, the AG accused Marriott of intentionally “ambiguous” with its final price online so consumers could confuse resort fees with government taxes “while this is just a hidden part of Marriott’s price. The latest GA filing also cites an internal Marriott email from 2016 that was found at some audited hotels, “if guests don’t click on the ‘total taxes and fees’ link, they’ll never know the resort fee amount “.

The company took issue with the AG’s claims that the disclosures were insufficient and intentionally ambiguous.

“As stupid as it sounds,” Marriott attorneys wrote in their response to AG’s motion, “the district is begging the court to ignore the entire web feed process (which is just two web pages additional) and find the first web page misleading as it omits the living expenses disclosed in the two web pages it wishes to ignore. “

A spokesperson for the attorney general’s office told NBCLX in a statement, “Marriott is taking advantage of consumers by deliberately deceiving them about room prices just to increase the company’s bottom line.

“Our complaint alleges bait-and-switch advertising and deceptive pricing practices, which are illegal. We strive to hold Marriott accountable and force the company to change its practices so consumers know the price they are paying.

Marriott declined NBCLX’s request for comment. But former Marriott executive Jeffrey Wolff said when testifying that disclosing a property’s true rate in advance “would put us at a competitive disadvantage compared to hotels, to other hotels. , to our competitors “.

In its response to AG’s motion, Marriott also rebuffed claims that the resort fee program’s sole purpose was to increase profits, saying it also improved “guest satisfaction” and “l ‘resort experience’.

The impact on customers

An analysis by Marriott’s expert witness, submitted in February 2021, suggested that only 76% of experienced travelers were able to correctly identify the total amount they were charged when booking a room with resort fees. At least 9 percent appeared to be unaware of resort fees.

The analysis ignored new online shoppers, who would be even less likely to be aware of additional hotel charges at checkout, the attorney general argued in his summary judgment motion.

The lawsuit also alleges that customers are adversely affected when Marriott does not offer transparency during the online research process, as it costs them time, money and the ability to “find the product they prefer the most.” more “.

The allegations echo a 2017 analysis by a Federal Trade Commission economist who found that separating room rates from living expenses was likely to cost consumers time and money.

Beyond Marriott Resort Fees

The depositions also revealed that Marriott used to require hotels to “qualify as something called a ‘resort’ to charge a resort fee.” But corporate emails cited in the attorney general’s complaint explained how Marriott created the “destination” and “destination amenities” category of fees in 2014 to allow non-hotels to charge the fees as well. additional.

The Attorney General also alleges that some Marriott properties have started charging additional fees for a set of services and products that were previously included in the rental of the room, such as parking, water or use of the spa. fitness.

The amenity package often included items that the attorney general said had no real value, such as using a landline phone or fax machine. But according to depositions cited by the attorney general, Marriott told its employees and franchisors that “living expenses are mandatory” and “should not be considered optional” when booking.

Hotels and drip prices

The Federal Trade Commission calls the practice of advertising only part of the price of a product upfront and then revealing additional charges at the end of the purchase process as “drip pricing.” . A 2019 Consumer Reports survey found that hotel surcharges, resort fees, and taxes can increase the final price by 11 to over 100%.

As resort and destination fees have become a bigger slice of the profit pie for Marriott and its competitors over the past 20 years, the FTC has issued several warnings about misleading consumers. However, neither the FTC nor Congress has taken much action to combat the accommodation and tourism industry, which spends millions of dollars a year to pressure Washington.

Instead of heeding the warnings, many chains have only expanded their resort fee programs, even into non-tourist properties. The Consumer Report survey found that of the 34 hotel chains that had been warned about drip pricing by the FTC, 31 still charge resort fees without including them in the initial online price shown to guests.

Noah Pransky is the national political editor for NBCLX. He covers Washington and state politics for NBCLX, and his investigative work has won national Murrow, Polk, duPont and Cronkite awards. You can contact him confidentially at [email protected] or at Facebook, Instagram Where Twitter.

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