Hotel and tourism executives expect greater scrutiny of resort and airline fees in the wake of President Joe Biden’s State of the Union speech denouncing “hidden surcharges too many businesses use to make you pay more.”
Biden last week introduced the Junk Fee Prevention Act, pledging not only to tackle the issue of hotel resort fees, but airline fees as well.
“We’ll ban surprise ‘resort fees’ that hotels tack on to your bill. These fees can cost you up to $90 a night at hotels that aren’t even resorts. And we’ll prohibit airlines from charging up to $50 round trip for families just to sit together. Baggage fees are bad enough — they can’t just treat your child like a piece of luggage,” the president said.
“Americans are tired of being played for suckers. Pass the Junk Fee Prevention Act so companies stop ripping us off,” he added.
Hawaii lawmakers some time ago required hotels to disclose resort fees, as evidenced on Hawaii hotel websites where room rates are displayed prominently, and resort fees are also found — albeit in smaller type.
Hawaii lawmakers also mandated that resort fees were subject to transient tax rates. Even so, most Hawaii hoteliers are resistant to lumping the resort fees into the average daily rate, $371 in 2022, because the end result becomes really high.
Paul Brewbaker, principal of TZ Economics, said resort fees are a way of getting more money for a property than people are willing to pay based on demand.
“In economics that’s called fraud because you are exploiting an information asymmetry. It’s just one of these behavioral economics quirks that people don’t add the things up and think of the total,” Brewbaker said. “The policy prescription is to make the default an all-in cost to the consumer.”
Gov. Josh Green, who attended the State of the Union, said, “Purely from a consumer protection point of view, businesses need to be upfront about the fees and additional charges customers will be expected to pay. People have a right to honesty in business transactions, whether they’re booking an airline flight, a hotel room, shopping at a grocery store or planning to eat at a restaurant.”
“This transparency is why we’re discussing possible visitor impact fees in public, as well as the reason we need to collect revenue to offset the effects that 10 million visitors a year have on our natural resources.”
Mufi Hannemann, president and CEO of the Hawaii Lodging & Tourism Association, said, “It’s clear that the president wants to do this. He did it to the banking industry recently. As long as it’s fair and equitable and all aspects of the hospitality industry are held to the same rules and standards, it’s going to be hard to resist this. But if they are just picking on hotels, that’s something else.”
Hannemann, who is a new appointee to the U.S. Travel and Tourism Advisory Board, which advises Secretary of Commerce Gina Raimondo and the Commerce Department on issues and concerns affecting the nation’s travel and tourism industry, added that “there’s a point to be made that everybody’s not clear. I get that.”
According to Curt Cashour, a spokesperson for the American Hotel and Lodging Association, 94% of hotels don’t charge resort fees. For those that do, Cashour said that “it covers unique and tangible amenities such as food and beverage credits, special events, access to pools and beaches, transportation and spa services.”
However, a higher number of options for lodging fit into the resort category in Hawaii.
Pleasant Holidays President and CEO Jack Richards said resort fees have now spread to 74% of the Oahu hotels that his company offers. In contrast, he said, 46% of the hotels on Maui that Pleasant Holidays offers charge resort fees.
Richards said the resort fees range from $25 to $50 a night on both Maui and Oahu. He said parking fees are on top of that and range from $15 to $62 per day on Oahu and from $10 to $45 per day on Maui.
“When you combine the resort fee with the parking, we have one hotel that charges $112 per night — that’s over $700 for a week, which is a big amount,” he said. “We don’t have anything to do with these fees, but we have to break the news to the customers and they don’t like it.”
He expects resort fees now will fall under greater scrutiny across the nation.“Keep in mind that President Biden will be out campaigning on this theme now,” Richards said.
Hotels across the country have been lumping fees together under one resort rate for decades. Depending on the package offered, consumers might view resort fees as an added value or an irksome part of travel.
Jason Maxwell, a bartender at the Waikiki Beach Marriott, said customers found resort fees more tolerable in the past, when they included amenities like two free drinks and 10% off a meal instead of today’s commonly obsolete benefits like use of the in-room landline or DVD rentals.
Keith Vieira, principal of KV & Associates, Hospitality Consulting LLC, said most of the major hotel brands like Hilton and Marriott must adhere to a 5-to-1 value proposition before getting approval for a resort fee bundle from their corporate offices.
“If the fee is $50, they have to provide $250 in value, so from our standpoint and really from most of the guests’ standpoints, it’s a value,” Vieira said. “The impact of un-bundling the resort fee is that you would go back to charging all of these additional service charges, which wouldn’t be in the best interest of the consumer.”
Richards said even when the price of a resort fee is transparent, inclusions differ from property to property. Resort fees also can be problematic when bundles don’t account for customer needs, he said.
“We were involved in a claim down in the state of Florida. The resort we were using had resort fees, and they charged the customer a resort fee to use the health center and she was disabled and it wasn’t equipped,” Richards said. “She didn’t understand why she should have to pay for something that she couldn’t even enter. They ruled in her favor.”
Richards said that some years back the Florida Attorney General’s Office cleaned up a lot of the confusion around resort fees.
“I was with the Hotels.com brand back then, and I got summoned to Florida to talk about resort fees,” Richards said. “What they wanted to see in terms of distributors was how we were going to display it on the website and how we were going to tell people. It was a mess.”
Kekoa McClellan, principal of The McClellan Group and AHLA Hawaii spokesperson, said the National Association of Attorneys General and certain other states across the country are looking at ways to take Biden’s words and turn them into action.
He said Hawaii’s hotels already are prominently displaying resort fees, but “where things get messy are when people are booking through third-party brokers that may or may not be displaying the resort fees prominently.”
McClellan added that “AHLA is engaging with the Biden administration, with lawmakers on Capitol Hill and key regulators on this issue with the intent of ensuring that we’re maintaining a level playing field with equal treatment of fee disclosure between our hotels, third-party distributors and short-term rentals as well as the fact that the industry retains the ability for hotel businesses to make independent decisions about what types of fees that they may charge.”
Hotels are not the only businesses on notice regarding so called “junk fees.” Biden’s State of the Union address also referenced credit card companies as well as ticket sellers, cable, cellphone and internet providers, and airlines.
Congress previously told the Transportation Department to review airline seating policies and consider how to ensure that children under 14 sit with an older family member at no extra cost. The department issued guidance in July urging airlines to do so “to the maximum extent practicable.”
Marli Collier, a spokeswoman for Airlines for America, a trade group that represents the largest U.S. carriers, said its members — including American, United, Delta and Southwest — don’t charge family- seating fees, although some budget airlines do.
Collier said the larger airlines “make every effort to accommodate customers traveling together, especially those traveling with children, without additional charges, and consumers are offered a range of choices at the time of ticket purchase, including various seating options.”
Hawaiian Airlines spokesperson Alex Da Silva said Hawaiian does not assess any fees to seat families together.
“There are already extensive rules governing transparency and disclosure of fees in selling tickets, and we strive to exceed those standards while offering guests a choice in the kind of experience they want to purchase,” Da Silva said.
Hawaiian already has eliminated change fees, and its credit card holders receive two complimentary checked bags, he said.
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The Associated Press contributed to this story.
Correction: An earlier version of this story misquoted Paul Brewbaker due to a transcription error. He referred to information asymmetry, not information age symmetry.
