Unfair Drip Pricing Is Harming Competition and Consumers
WASHINGTON, DC - Advocates for individual travelers as well as corporate travel managers today called on US Federal Trade Commission Chairman Jon Leibowitz to aggressively address the widespread practice of “drip pricing” by some hotels, motels and resorts. Long-time consumer advocate Ed Perkins, Consumer Travel Alliance (CTA) Executive Director Charlie Leocha, for individual travelers and Business Travel Coalition (BTC) Chairman Kevin Mitchell, for corporate travel managers, called for an end to a practice that harms consumers, travel buyers, travel agencies, governments, and competitors that display rates honestly. (Download FTC letter here.)
Drip pricing is a deception scheme whereby a supplier carves out a portion of its true price; labels that portion as a mandatory extra fee or charge; deducts it from the true price; and features the artificially reduced remainder of the true price in advertising, online postings and price information supplied to global distributions systems and travel agencies. Typical carve-outs include “resort,” “housekeeping,” and “Internet access” fees; however, there are others. “Often,” notes BTC’s Mitchell, “buyers never find about the amount of the fees until they arrive at the hotel or resort.”
“There’s no question that the practice is deceptive,” says Perkins; “The Florida Attorney General described it as ‘inherently deceptive’ in a comparable action against cruise lines in 1997.” The US Department of Transportation agrees: It quickly quashed the practice some airlines adopted when they started carving “fuel surcharges” out of their base fares.
“We’re not trying to force hotels to abandon the services they claim the fees cover,” continues Mitchell; “We’re just trying to make sure they price them honestly and accurately.” Perkins adds, “What we’re asking for is quite simple: If you have to pay it, it has to go into the posted price.”
Petitioners are not seeking to impede the workings of the travel marketplace. Instead, they’re asking for actions that will make the marketplace more transparent and honest for all the stakeholders. Unfortunately, the hotel/resort industry has embraced unfair and deceptive drip pricing to such a pervasive degree that the only recourse is for FTC intervention.