A major U.S. hotel company is being summoned to court over a fee it charges customers that is reportedly not initially disclosed.
A consumer group says the hotel chain hides a fee that appears during the checkout process, under the category of "taxes and fees."
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Travelers United has filed a class action complaint against Hyatt Corp. (H) -), alleging it has been cheating customers out of millions of dollars for falsely advertising its hotel room rates.
Travelers United describes itself as a nonprofit consumer protection organization that advocates for American travelers.
"Rather than disclosing the full cost of its hotel rooms upfront, Hyatt instead adds on last-minute 'destination fees,' 'resort fees' and other similar charges that are really part of the daily room rate," a filing document alleges.
"Junk fee" practices, Travelers United says, account for more than $2 billion per year in the hotel business.
"Junk fees are not just greedy and deceptive. They are illegal," said Lauren Wolfe, Travelers United’s chief legal officer.
"This lawsuit will show that hotels violate the law when they charge resort fees without including them in the advertised price," she continued. "American consumers are sick and tired of corporations taking advantage of them with relentless junk fees. Travelers United hopes this lawsuit permanently ends this deceptive practice, and holds Hyatt accountable for their false advertising."
Travelers says it is confident in a jury trial
The court filing specifically mentions the Grand Hyatt Washington hotel. The case is Travelers United, Inc. v. Hyatt Hotels Corporation, et al., in the Superior Court of the District of Columbia, Civil Division.
"While the process of stopping these illegal fees has just begun, we are confident that at trial, a D.C. jury will find that Hyatt violated the law," said Peter Silva.
Silva is one attorney on a team at public interest firm Tycko & Zavareei LLP that is representing Traveler's United.
"The hotel adds a $20 per night destination fee," wrote travel expert Gary Leff on View From the Wing. "And Hyatt bundles this into 'taxes and fees' — disclosed late in the checkout process — making it appear that this is a mandatory government charge."
"Junk Fee practices — like Hyatt's — are not just greedy and deceptive. They are illegal," the filing says. "Junk Fees violate the District of Columbia Consumer Protection Procedures Act (CPPA), which requires business to sell goods and services for their advertised prices."
Image source: Hilton Hotels
Other hotels operate similarly
Leff also explains his view that this issue is not confined to Hyatt. He mentions some recent similar history with Marriott (MAR) -) and a take on how he believes Hilton (HGV) -) is handling the issue.
Four years ago several state attorneys general sued major hotel chains over their resort fee practices. Marriott entered into a settlement with Pennsylvania because that state was willing to forego any penalties and just obtain commitments of better behavior going forward.
Generally Marriott displays full prices including taxes and fees on its website, but you won’t see it when comparing different hotel brands with Marriott hotels on other sites. (Marriott doesn’t always comply.) My understanding is that Hilton has the technology ready to do the same thing, but is just waiting to see what direction the industry goes. Other chains would face an IT lift.
After Marriott was set up with resort fee transparency on its own site, Marriott settled with Texas agreeing to do what it was already doing (and not pay penalties for past behaviors). This was trumpeted as a win by embattled state attorney general Ken Paxton. Paxton is also suing Hyatt.
At the time of publication, Hyatt has not responded to a request for comment.
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