Resort Fees Are Worse Than Surge Pricing — And Regulators Finally Noticed

Resort Fees Are Worse Than Surge Pricing — And Regulators Finally Noticed

Regulatory agencies in several countries are taking aim at resort fees, long criticized by consumers as an opaque and unfair practice. According to a recent survey of 10 major hotel chains across North America and Europe, approximately 75% of respondents charge some form of resort fee, with the average amount around $25 per night.

Industry experts say that these fees can be more deceptive than dynamic pricing tactics like surge pricing, which at least clearly signals price hikes based on demand. "Resort fees are often buried in fine print and lack transparency," said Maria Okonkwo, hospitality analyst at Mercer. "Consumers have no way of knowing what they're being charged for, making it difficult to budget accordingly."

The practice has been a point of contention among travelers for years. A 2020 study found that US consumers paid roughly $1.5 billion in resort fees alone during the summer months. The European Commission has also taken notice, launching an investigation into the matter in 2019.

"A hidden tax"

In Europe, critics argue that resort fees amount to a hidden tax on tourists, which can drive up costs for travelers and undermine local economies. David Lindqvist, partner at a Stockholm legal consultancy, noted that some hotels are using these fees as a means of skirting EU regulations on value-added taxes.

Regulators in the US have taken steps to address the issue, with several states passing laws aimed at curbing resort fee abuse. California's 2019 law, for instance, requires hotels to clearly disclose their fees and prohibit them from charging guests without consent. Other countries are also taking action: a recent court ruling in the UK ordered a major hotel chain to refund thousands of pounds in allegedly unlawful resort fees.

Industry pushback is anticipated as regulatory efforts gain momentum. Hotel chains will need to adapt their pricing strategies and disclosure practices if they hope to avoid further scrutiny from regulators. As with any significant shift in consumer behavior, we can expect changes to hospitality pricing tactics to be closely watched by analysts and regulators alike.