Everyone who has ever stayed in a casino resort is familiar with the resort fee - which is too often added as an additional charge after the standard hotel fees. But the Federal Trade Commission has just ordered casino resorts and hotels to include these resort fees to their advertised room rates to avoid the typical 'bait-and-switch' tactic employed by hotels and resorts.

The Federal Trade Commission has implemented a significant rule to end deceptive pricing practices in the hotel and casino industries, marking a victory for consumers who have long been frustrated by hidden resort fees. The bipartisan move bans the practice of advertising artificially low room rates only to tack on mandatory charges at the time of booking or check-in.

The new rule

Under the FTC's 'Junk Fees Rule,' announced on December 17, hotels, including casino resorts, must include all unavoidable add-on charges in their upfront advertised prices. This rule specifically targets practices often labeled as 'bait-and-switch' pricing, where the true cost of a hotel stay is obscured until the final stages of booking or upon arrival.

"People deserve to know up-front what they're being asked to pay - without worrying that they'll later be saddled with mysterious fees that they haven't budgeted for and can't avoid," said Lina Khan, FTC Chair, in a statement.

The rule, which also applies to live event ticketing and vacation rentals, will take effect in 120 days, ensuring that consumers receive clear and honest pricing. While the rule does not eliminate resort fees, it mandates that such costs be included in the advertised nightly rate, exclusive of taxes.

Addressing consumer frustration

Resort fees, often branded as facility, destination, or amenity fees, have long been a source of frustration for travelers. Initially introduced in the 1970s as small surcharges for extras like fitness centers and newspapers, these fees have evolved into substantial add-ons, significantly inflating the actual cost of a stay.

In Las Vegas, a major hub for the casino resort industry, these fees can reach as high as $55 per night at premier properties such as the Mandalay Bay and Bellagio. Guests booking rooms through third-party platforms frequently encounter misleadingly low rates, only to be hit with steep additional charges upon arrival. For example, a midweek stay at the Luxor may be advertised at just $25 per night. However, the property imposes a nightly resort fee of $45, bringing the actual cost to $72.34 per night. This disparity has left many travelers feeling misled and overcharged, particularly when budgeting for their trips.

Relief for gamblers and tourists

Casino resorts have been accused of using resort fees to mask the true price of their accommodations, creating an illusion of affordability compared to competitors. Critics argue this tactic distorts the marketplace, unfairly disadvantaging consumers. The FTC's decision comes after two years of public consultation, during which the agency received more than 70,000 comments. The overwhelming feedback demonstrated the widespread frustration with hidden fees and their impact on consumer trust.

"Resort fees have been a thorn in the side of travelers for decades," said one commenter. "This rule ensures that pricing information is timely, transparent, and truthful, eliminating the element of surprise that often accompanies the final bill."

The Biden administration, in its final weeks, made addressing junk fees a priority. This rule fulfills a key consumer protection goal for the president, ensuring that hidden fees are no longer a standard industry practice.

Implications for the industry

Hotels and casino resorts now have 120 days to comply with the new regulations. While the rule does not outlaw resort fees, the transparency it demands is expected to bring significant changes to how room rates are presented to potential guests. For many travelers, the rule will simplify budgeting and planning. However, it could also lead to an initial perception of higher prices as resorts adjust their advertised rates to reflect the inclusion of mandatory fees.

The casino and hospitality industries are likely to feel the impact of these changes, as their pricing strategies must adapt to this new level of transparency. Analysts predict that while the rule may lead to some initial resistance from businesses, it will ultimately benefit consumers by fostering a fairer and more competitive market.

A step toward fairness

The FTC's decision to address deceptive pricing practices is being celebrated as a win for consumer rights. By bringing resort fees into the open, travelers will no longer face unexpected charges at check-in, and the days of misleadingly low advertised rates are coming to an end.