February 23, 2023

Is This Really the End of Junk Fees in Travel?

Are travel junk fees about to go away?

Junk fees are those annoying "gotchas" like mandatory resort fees. Hotels quietly add them to your bill after an initial price quote to cover items such as pool towels and "free" phone calls. Airline seat assignment fees target nervous dads like me, who feel they have to pay an extra $50 per seat, so they don't get separated from their kids on a flight.

You might be forgiven for thinking these nuisance surcharges were headed for the emergency exit if you watched the State of the Union address earlier this month. President Joe Biden promised to "take on" junk fees like hotel resort fees and seat assignment fees for families.

"I know how unfair it feels when a company overcharges you and gets away with it," he said. "Not anymore."


"There's no question that government has a role to play," said Bill McGee, a senior fellow for aviation and travel at the American Economic Liberties Project.

But are junk fees about to end? To answer that question, you have to understand how important these fees are to the travel industry and how previous efforts to stop junk fees have fared. Travelers are ready for a change – I know I am – but is political rhetoric all it will take to get the job done?

What would happen if junk fees disappeared?
Junk fees are the lifeblood of the travel industry. Annual revenue from airline ancillary fees soared by 56% last year to $103 billion worldwide compared to 2021. (Many ancillary fees are considered junk fees.) Airlines tack these extras onto your ticket purchase to cover things like a seat assignment or a carry-on bag. These are items that used to be included in your ticket price.

If airlines removed the charges, it would cut deep into their profits.

How about hotel resort fees?

In 2018, U.S. hotels collected $3 billion in these fees. They account for about 3% of revenue among hotels that charge them. These fees also used to be included in the price of a room.

If hotels removed the charges, it would also cut into their profits.

Bottom line: Banning junk fees would hit the industry hard. Some companies that have built their entire business model around fees, like the "ultra" low-cost airlines, might find it difficult to survive.

The travel industry will fight this
To get an idea of what might happen next, you have to rewind to earlier junk fee fights.

"Hotels are lying about their room rates when they do not include the extra fees," said Charlie Leocha, president of Travelers United, which has been fighting resort fees for years. (As a crusading consumer journalist, I co-founded Travelers United a decade ago.)

There have been lawsuits by guests against the hotels and one action by a state attorney general.

Hotels hired the best attorneys to fight back. Remarkably, no law specifically forbids these fees from being added to a hotel bill. And in every case, the hotels won.

The action by a state attorney general was anticlimactic. In late 2021, Pennsylvania's attorney general announced a settlement with Marriott International on resort fees. Marriott agreed to "prominently disclose" the total price of a hotel stay, including room rate and all other mandatory fees, on the first page of its booking website.

The hotel chain has negotiated several deadline extensions. At the time of this writing, it still hasn't fully complied with the agreement.

I'd call that a hollow victory.

Travelers are ready for a change
Travelers are done with junk fees.

"There's a reason they're called junk fees," said Barry Maher, a frequent traveler and professional speaker. "And I'd love to see the administration outlaw them. Particularly, when they're either undisclosed or disclosed in ways designed to make sure you don't pick up on them."

Guests aren't just mad at travel companies for charging these extras. They're offended.

"Junk fees are so annoying since they ultimately are based on deception," said Thomas Plante, who teaches psychology at Santa Clara University. "If they want to just disclose what the fees will be upfront or make clear what is included in their overall price, that is OK. But leading you in one price direction only to be surprised when the real price is revealed later is not OK. It is an ethical issue, in my view."

Junk fees won't die until we change the way we think
Junk fees are slippery. Even if Washington passes new laws banning certain fees, the travel industry will innovate its way around the rule.

Gerri Hether wrote to me from Maui this week, where she had tried to reserve a poolside cabana at her resort. The hotel already charged a hefty fee of $200 a day, but this year it decided to tack on a "convenience" fee of $27 per day.

"The fee covers tips for the cabana staff for service at the cabanas, which is pretty limited at best, and the online booking fee," said Hether, a retired nurse from Mesa, Arizona.

Mandatory tips? A "convenience" fee for booking online? Come on. Why don't you just raise the cost of a cabana to $227 a day?

The answer: Because no one in their right mind would pay $227 for a cabana. But if you lower the price, you might get a few takers.

If travelers stopped shopping for travel based on just one criterion – a low price – and took into account the total cost of a flight or resort stay, it might change the way travel is priced. But until they do, the fees will persist. Because they work.

Prediction: Junk fees will get a makeover unless...
It will be difficult to get rid of all junk fees. Even if the Biden administration ends hotel resort fees and some seat assignment fees, travel companies will find a way to make up for the lost revenue.

Peter Vlitas, executive vice president of partner relations for Internova Travel Group, fears legislation would force airlines and hotels to raise rates. "If they stopped charging fees, they would shift the cost to the price of the ticket or room," he said.

Like an old car you find in a junkyard, the travel industry will probably undertake a careful restoration of its fees, bringing them into compliance with the law but angering its customers even more.

To eliminate all junk fees, travelers need to change their behavior to consider the total price of their trip. And we would need a more sweeping law – one that requires the price you're quoted for anything to be the price you pay. That's something the current administration hasn't proposed yet.

I doubt they ever will.

Copyright 2023 USA TODAY. All rights reserved. From https://www.usatoday.com. By Christopher Elliott.

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