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New travel rip-off: Hidden hotel fees

Budget-conscious travelers beware: Sneaky added "hotel" and "resort fees" are proliferating. And although the federal government demands clear disclosure of these add-on charges, consumers who book online say the fees are so cleverly sandwiched into the deal that they are often missed until it's too late -- sometimes until they're slapped onto hotel bills at the end of a stay.

"This thing is out of control and there's no end in sight," said Christopher Elliott, a consumer advocate and author of "How to be the World's Smartest Traveler." "The practice is extremely deceptive. But the hotel industry is not only doing this, they're doing this increasingly aggressively."

Consider a consumer attempting to book an "Express Deal" for a four-star Las Vegas hotel on Four hotels in this category were recently advertising bargain-basement rates of less than $50 a night, one for as little as $33. But consumers who clicked through to book one of these super-cheap rooms would find add-on fees at three of the four hotels. Indeed, the supposedly cheapest offering -- the room advertised at $33 -- tacked on an "additional mandatory fee" of $28, boosting the real room rate by 85 percent.

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In fact, only one of these four hotels was really available for less than $50 a night; it was the one that appeared to be the most costly at first glance, advertised at $46 per night. (There's no way to specifically name these hotels because Priceline obscures the name of the hotel with its Express Deal and Name Your Price tools until after the hotel is booked and the reservation is non-refundable.)

A Priceline spokeswoman says the practice of tacking added fees onto the advertised price after a hotel is selected is not deceptive. Consumers are notified of the additional fee and the total cost of the booking, including the added fee, when they're still able to back out of the deal.

"We are compliant in disclosing the fees prior to purchase," Priceline spokeswoman Flavie Lemarchand-Wood said. "We try to make it as clear as possible."

Some consumers disagree. Los Angeles businessman Sean Reily said he was caught unaware when recently making a last-minute hotel purchase in New York through Priceline's Express Deal option. He agreed to pay $321 per night for a four-star Times Square hotel, and quickly clicked through what he thought were standard disclosures, not realizing the hotel would tack on an additional $25 nightly fee for his five-night stay.

Reily said he now realizes the additional fee did appear on the screen prior to payment, but contends it was buried deep on the page, among other standard fees, such as room taxes.

"If they really wanted to make the cost of the room clear, they'd put it in the headline, not in the fine print 40 lines down," he said. "How is a fee that's charged on a per room, per night basis not part of the room rate?"

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Reily wasn't the only one taken by surprise. The New York hotel where he stayed, called Row NYC, is panned in dozens of Priceline's own online reviews, many of them echoing outrage at the add-on fee. Among the nearly 500 reviews listed as coming from "verified Priceline customers" were myriad complaints, including "charged facility fee without notice...add-on fee I was not expecting...additional charge and we don't know what for...hidden surcharge."

Priceline is not the only site that keeps these add-on fees out of big-print price comparisons. Sites hosted by Expedia, Orbitz, and The Automobile Club of Southern California all did the same, disclosing the add-ons later in the booking process with varying degrees of clarity. Of the half-dozen sites tested by CBS MoneyWatch, only appeared to include the fees and taxes as part of the advertised price.

Unfortunately, Elliott said, any hotel or site that shows the real room rate is penalized for its honesty by appearing uncompetitive against the sites that "unbundle" the costs, showing just a portion of the total as consumers compare prices.

"There should be an outcry about this," Elliott said. "Consumers should not be suckered into paying a higher room rate than they bargained for."

While the unadvertised fees can be confusing, FTC attorney Mamie Kresses said the fees are not illegal as long as they're disclosed. What constitutes a clear disclosure, however, is a matter of debate.

Two years ago, the agency held a conference on what it called "drip" pricing in response to consumer complaints about add-on hotel fees. Following that conference, the FTC sent warning letters to 22 hotel operators, cautioning that failure to disclose these fees could result in misrepresentation of the room price. But regulators stopped short of requiring hotels to "bundle" all mandatory costs into a single room rate. Nor did it demand standardized disclosure.

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"We want that total price to be upfront -- the most prominent position on the page when consumers book a room," Kresses said. "But I won't say that has to be on every [or the first] page."

But that isn't the advice the FTC gave to consumers on the eve of sending out those warning letters to hotels: "Listing the resort fee near the quoted price or in the fine print -- or referring to other fees 'that may apply' -- doesn't cut it. If you find out a hotel hasn't told you the whole story about mandatory fees, in addition to complaining to the company, file a complaint with the FTC," the agency said in a consumer bulletin.

Elliott's not convinced the FTC will do anything in response to complaints, but he still advises consumers who feel as if they've been hit with surprise charges to express their grievances to the agency, along with to the hotel and booking site they dealt with. Public outcry could stem the rapid rise in this deceptive practice, he maintains.

Additionally, Elliott advises anyone who was blindsided by an add-on fee to dispute the charge with their credit card company. While the booking sites may allow small-print disclosures, some credit card companies have taken the consumer's side in these disputes and reversed the charges. Moreover, merchants that have a high volume of disputed charges can run afoul of credit card providers, which in egregious cases have the ability to terminate a vendor's right to accept credit cards.

"If there was enough of an outcry, hotels would have to stop doing this," he said.

In the meantime, it's a classic case of buyer beware. Say Priceline's Lemarchand-Wood, "It's very important to read everything on the page."

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