Airlines and hotel resort fees came up during President Joe Biden’s State of the Union speech this week in the US Capitol. Let’s take a look at what he said and the potential ramifications.
Biden: Airlines “Can’t Just Treat Your Child Like A Piece Of Luggage”
During his State of the Union speech, Biden pivoted to travel, including airlines and resort fees.
“I know how unfair it feels when a company overcharges you and gets away with it.
Not anymore.
We’ve written a bill to stop all that. It’s called the Junk Fee Prevention Act.
We’ll ban surprise “resort fees” that hotels tack on to your bill. These fees can cost you up to $90 a night at hotels that aren’t even resorts.”
That’s music to my ears, but will the final Junk Free Prevention Act actually ban so-called “resort fees” or merely require their immediate disclosure when booking? Frankly, I don’t care…however hotels want to play games with taxes and fees, I simply need to know all-in pricing from the very moment I search for space. Such clarity is necessary and such transparency is critical in maintaining and fostering a competitive system of commerce. Will the GOP-led House pass it?
> Read More: Is The End Of Deceptive Resort Fees Finally In Sight?
Next, Biden pivoted to airlines.
While fares may no longer be regulated by the Civil Aeronautics Board, the airline industry is deeply intertwined with the federal government and the politicians who fund it. After a series of bailouts during the pandemic, airliners are even more beholden to the federal government and as part of that relationship, the Biden Administration has mulled a number of protections it asserts will better protect airline consumers.
“And we’ll prohibit airlines from charging up to $50 roundtrip for families just to sit together.
Baggage fees are bad enough – they can’t just treat your child like a piece of luggage.
Americans are tired of being played for suckers.”
Here’s where I am not sure I am in full agreement. The very business models of ultra-low-cost carriers like Spirit Airlines and Frontier Airlines depend upon unbundling everything from the price of the seat. If I was in charge, families wishing to sit together would be forced to pay in advance for seating or else they would not be allowed to book, just like you cannot book an eight-year-old on a solo flight. That strikes me as the better solution.
My desire for airline regulation would be less about seat assignment fees and more for a sort of EU261/2004 model that protects consumers in the case of long delays and cancellations. For example, I wrote about my trials with Delta yesterday and think that federal regulators should mandate that if an airline sells you a ticket from A to B, it is responsible for getting you from A to B regardless of which partner may be operating the flights. You sell the ticket, you are on the hook for it…
CONCLUSION
Biden has promised to crack down on hotel resort fees (great) and seat assignment fees for families (more complicated). Whatever ultimately happens, the primary goal should be transparency.
On a personal note, the State of the Union used to be something so special to me…a speech in which I’d be almost as eager as Sheila Jackson Lee to watch each year. But for the last several years, spanning two administrations, I increasingly see it as tedious grandstanding. Maybe it’s time for presidents to deliver written reports to Congress, as in years past? Then again, who am I kidding? The free media exposure is too great to pass up, so the theatrics will continue.
image: White House
I do not share your optimism. Nothing will happen. It would not matter if Biden had a law to cure cancer, congress will not pass it as they do not want him to be able to claim credit for anything. He is a lame duck until the next elections.
There is too much money being made by vested interests to ever cause US to adopt transparent pricing in any aspect of commerce. The US must be the only place where you never really know the exact price before the transaction
And yet we now see all-in pricing when booking airfare. Remember the days when we only saw the pre-tax amount on the initial search page? Progress is possible and we must make it when it comes to resort fees. This should be a bipartisan concern.
I hope you are right
The “resort fees” are out of control. I am going to New York this weekend and staying at the Hyatt. They are charging me a $150 “resort fee” for 3 nights. Where is the resort? It’s New York City, not Hawaii.
Does anyone actually think this would be a net savings to customers? The resort fees will be added to the room rate if legally required to disappear. And room rates would also go up another 5% to cover the additional money hotels would now owe 3rd party booking agencies that they currently aren’t paying on the resort fee portion.
Another attempt by the government to “do good” that will cost consumers money. Why would hotels just give up all this income? It may make it easier for consumers to compare rates but otherwise it’s going to save them nothing.
Here, I disagree with you. Hotels and Airbnb should not be allowed to offer deceptively low “base” fares in order to entice a click, only to be (in some cases) more than doubled once the fees are added in. That transparency should be the price of doing business in the USA. Hotels will always find new ways to be greedy, but should not engage in deception.
I agree woth you but its more than just that. Most people will not spend time clicking through all the way to the final payment page on 4 different hotels (or whatever youre looking at). They might do 2. A lot will choose one based on the lowest base fare and assume they all have similar fees. This system DECREASES competition! The increased transparency of upfront total prices will actually make it more of a competitive as it should be in a capitalist country!
I was thinking that it’s ok with me if Hotels don’t include tax in booking search engines if only because it’s at least spread across the board so even if I took Hotel A over Hotel B because of a particular rate, at least it’s “democratic” and they both are passing on the same tax rate.
Nonetheless, there’s a case to be made for educating the consumer about taxes in that we take for granted how much of an airline ticket is amazingly comprised of taxes along with also other consumer products such as mobile phones. Not only as consumers, but taxpayers, we should be educated about this to complain to the officials to have something done about them.
Although I didn’t vote for Biden, I find it refreshing to see this “common man’s” issue finally being raised. Education does little if there’s no significant mechanism in place for feedback and change.
If we had a consistent sales tax system, then I would agree with your point… but we don’t. Local municipalities can enact their own sales taxes on hotels, and most consumers can’t really discern where one taxing district ends and another begins. You might have to pay stadium tax in Irving or Houston, but not in Grand Prairie or Katy, and for most searches, hotels in either of those markets would be acceptable. Consider Columbus GA or Savannah GA: if you’re on the GA side, you have to pay the excise tax along with sales tax. If on the Alabama side (or the South Carolina side) the excise tax goes away.
There’s really no way for a visitor to be able to assume what a local sales tax would be, and with how much municipalities love to pass these taxes (only out of towners pay them!) the problem will never improve.
I thought about that just as I wrote it and, also, that there’s little mechanism for individual disgruntled consumers to gripe about excessive hotel or rental car taxes. It’s like how some “speed trap” cities with a lot of through traffic on the freeway fleece drivers from other states who pay the ticket rather than fight it.
I’m thinking perhaps it would make sense to just have bundled pricing for nearly everything because then the businesses, who have the associations and deeper pockets than average consumers, will put up a fight when a tax is raised and the tourists have to pay more. If the tax isn’t advertised as part of the price, they’ll probably resist it less. Heck, they may even be in FAVOR of raising taxes on tourists since they issue the bill as the tourist is leaving.
“The resort fees will be added to the room rate if legally required to disappear.”
But why would that matter? Whether you’re paying $150 a night, or $100 plus a $50 “resort” fee, you’re paying the exact same amount of money in total. Maybe there is some leakage due to the commissions that will now need to be paid on the “resort” fee portion, but how many people actually book hotels through 3rd party sites today? Maybe you see the hotels engaging in this deception forced to raise their rates a couple of percentage points. Or maybe I lose my “free” bottle of water, coupon for a crappy grab-and-go sandwich, and local faxes that are included with the fee. Big whoop.
Hidden resort fees are intentionally deceptive. Forcing transparency doesn’t really have a material impact on the bottom line, and it’s hard to defend them without sounding like a dummy, so this one doesn’t really take too much political capital.
I’m sure a guarantee from airlines that families on the same PNR will be seated together will be enough to satisfy the bill’s intention. This costs the airlines nothing. Again, an easy sell.
As for EU261 regulations. I’ve said it before and I’ll say it again. It costs the airlines too much money and Congress doesn’t want to piss their donors off. Both houses of Congress are going to have to look VERY different than they do now for something like that to ever happen.
Nailed it…Kabuki theatre. C’mon man! 🙂
If these passed, these laws will do absolutely nothing to people like me who do their research before booking something, except the raised prices due to the hotel/airlines compensating for loses they may get.
Brought to you by the “Coffe is Hot” guys.
Good to see Biden really tackling the big issues in the SOU.
What’s next? A bill that bans small popcorn boxes at movie theaters?
Ain’t gonna happen. After all, he clearly stated “MAKE NO MISTAKE! If you try anything to raise the cost of frisizhnjubs I will veto it.”
“My desire for airline regulation would be less about seat assignment fees and more for a sort of EU261/2004 model that protects consumers in the case of long delays and cancellations.”
Better yet, I want to see legislation forcing airlines to honor and eat the cost of “mistake” fares. You publish the fare, you should be forced to provide the service if I book it…
Agreed.
Even if the “gross total” is listed, there are back end antics. In my most recent AirBnB rental, I was given specific instructions to empty the garbage, load the dishwasher, pile the dirty towels in the tub, and leave the sheets on the bed. If not, a “supplement” cleaning charge could be applied. Surprised I wasn’t required to sweep and mop (beach rental). To cover my ass, I took pictures just prior to leaving the unit.
Afterwards, I was requested to give a positive review in order to get an 15% discount on future rentals of the host. The text messages kept coming for at least two weeks. I feel if I had given a negative review, I would have been hit with the mysterious supplement charge as punishment.
And don’t get me started on rental car fees & charges:
– Concession fee recovery
– vehicle license fee
– Frequent Flyer Surcharge (cashing in your points)
– customer facility charge
– motor vehicle lease tax
– non-refundable cancelation fees & charges
– fuel surcharges if returned below full
– daily collision waiver fees that agents intimidate you to buy (covered my AMEX card)
– GPS rental (even though the car has a GPS built into the info system)
– car seat rental
– 7.0% tax on all of the above plus the daily rate
I’m sure there’s a few others that I missed!!
This is a major issue–even more longstanding than resort fees–and sadly unlikely to ever see meaningful reform or regulation. Corporate greed rages on.
The Beverly Hills Hotel and Hotel Bel Air are now adding a 5% Employee Health & Benefit Surcharge. That’s pretty cheeky for luxury properties of their stature. How disappointing that they would include a cost of doing business as a surcharge to deceptively show lower initial pricing.
Agreed. Ridiculous.
You people just don’t get it. It’s not about controlling prices, but about forcing transparency. The goal is to force businesses to be upfront about what they are charging. This isn’t rocket science, and we’ll see where prices are once companies are not allowed to play so many games.
I’d rather have my elected politicians working on something as deceptive as resort fees, and other ancillary charges than chasing misleading stories about private citizen’s laptops.
Really? You’d rather not have massive corruption investigated? How does that make sense? Would you be saying the same if it was Trump kid laptop? What exactly is misleading about the laptop? And are you really a “private citizen” if you’re using your father’s name and influence–while VPOTUS–in business deals? Come on man..is right.
“if an airline sells you a ticket from A to B, it is responsible for getting you from A to B regardless of which partner may be operating the flights” Curious to know who would be on the hook if you booked a flight through expedia group channels or Amex GBT? The airlines didn’t sell you a ticket – so who is on the hook for that?
Airline technically issued it, but you are correct- AMEX (to use your example) would be on the hook.
And in fact, this has happened…and AMEX has bought tickets.
Seat assignment fee is absolute bull***t. I get your point that low cost airlines unbundle everything to keep the price low but they could very well add the fee to their base fare and if they’re not competitive enough consumers can go elsewhere. I just booked a biz class from PDX-LHR on BA and they want to charge me $125 for seat assignment. On one hand, I want to chance it and wait until checkin for free seat assignment, on the other hand, they’re flying the awful 787-8 with the old 2-3-2 seating and there’s only a couple of window seats that have any privacy at all and they might very well be gone before checkin. BA is the only airline that flies nonstop from PDX to LHR so I have no choice. I’m all for getting rid of the seat assignment fee.