Editor’s note: This column was written by Christine Taylor, a Principal Partner at The Towne Law Firm, P.C. in the firm’s Albany, N.Y., office, who focuses her practice in the areas of Hospitality Law, Business Law, Labor and Employment Law, Real Estate Law, Trusts and Estate Law and Litigation. Park owners can email firstname.lastname@example.org for a chance to have their questions answered in future columns.
Concertgoers, especially those vying for a ticket to see Taylor Swift, sparked a big discussion on ticket fees (and fees in general) after ticket sales for her latest tour shined a spotlight on the problems associated with fees. This controversy became so big that President Joe Biden stepped in calling for limits on ticket fees, but his call for limits extended further than ticket fees for live entertainment. The President’s request included banning fees for allowing family members to sit with young children on airline flights; early termination fees for TV, phone and internet services; and surprise resort and destination fees.
Can this implicate your business practices?
This is not the first time the government has investigated limiting or banning resort fees and thus, is something we should keep an eye on. Resort fees can include many things such as Wi-Fi costs, fees for spa treatments, costs to make unlimited phone calls, charges for access to the fitness facilities or other recreational amenities, as well as fees for boarding pass printing.
The issue with these excessive fees is that they cause the price for the accommodation or service to be much higher than what was advertised, which can cause customers to spend almost double the advertised price for an accommodation. Previously, attorney generals in at least six states brought an action against the Marriot and Hilton hotel chains for their resort fees. The matters were routinely settled out of court but had damages totaling hundreds of thousands of dollars. The impacts are lasting, requiring these chains to evaluate their business model to properly advertise the real rate.
So, what’s the real rate?
It’s the rate guests have to pay to stay at the facility. If you require them to pay anything additional to stay there, it must be included in the advertised rate as the total price. However, if they can select to partake in that add-on or decline, and can still stay, then the additional fee does not have to be included in the rate.
Now, the Biden administration has taken up the fight and is concerned that these excessive fees hide the full price which inhibits a consumer’s ability to compare prices and leads to them paying more than they had hoped to pay. This isn’t to say that there shouldn’t be extra fees for staying at a resort because it is fair to have extra fees to have a spa treatment or in the situation discussed above. However, charging people for services and items that one would believe would be included in the room cost, like phone calls or Wi-Fi, is unethical and could soon be illegal.
This issue also extends to credit card processing fees, a trade that is already heavily scrutinized by state law. If you are trying to pass on the processing fees to your customers, make sure you are doing it correctly! For instance, in New York, a processing fee for using a credit card must be advertised before a customer makes the purchase and the rate of the charge must come from the credit card company. Businesses that manufacture their own arbitrary fees or rates for using a credit card are breaking the law. Thus, if it’s a 3% fee you can only pass along a 3% fee. You should note that some states are “discount” states and some states are “charge” states. While in theory there might not seem to be a big difference you should know that “discount” states can discount if the person is paying in cash but must show the higher rate, generally. Whereas “charge” states can tack on the charge on top of the rate.
How does this affect campgrounds and fees like site lock fees, storage fees…etc.?
The same general principle applies as it does for resort fees. If you are advertising a site, make sure the price includes the necessities and is the rate someone could stay at your campground for — don’t bait and switch to get them in the door. If the rate you advertised is not possible, then you need to adjust your advertising to reflect that.
Collect those extra fees, offer the add-ons and recoup some of the credit card processing, but do it legally, such that you and the rest of the industry won’t be the next target for attorney generals and the government.