Marriott overhauled its resort fee disclosures; now Hyatt is in the crosshairs

Marriott out, Hyatt up to bat: The battle over resort fees entered its whack-a-mole phase this week.

Just as Marriott settled with Texas and Pennsylvania attorneys general to better disclose resort fees in overall nightly room rates, Hyatt popped up to become the latest hotel company to face a legal battle over the much-maligned practice. Texas Attorney General Ken Paxton filed a lawsuit this week against Hyatt "for violating Texas consumer protection laws by marketing hotel rooms at prices that were not available to the public as advertised."

The lawsuit specifically alleges Hyatt's practice of charging added hidden costs under the labels of resort fees, amenity fees or destination fees on top of nightly rates as the impetus for the lawsuit. Furthermore, the Texas lawsuit alleges many of these fees have nothing to do with elevating the customer experience and that some even reportedly go toward amenities that are usually standard offerings at non-resort hotels, such as fitness center access and in-room Wi-Fi.

Hyatt also charged these fees regardless of whether the guest actually used the amenities, according to the Texas attorney general's office.

"Hyatt's lack of transparency regarding hotel room prices has misled consumers and violated Texas law," Paxton said in a statement. "These deceptive practices enabled Hyatt to advertise lodging at artificially low rates, and it must end immediately. I will not stand by while Texas consumers are taken advantage of by Hyatt, or by any hotel chain that tries to get away with charging illegal hidden fees."

Resort fees are loathed by travelers and have become a political punching bag in recent years. Even President Joe Biden lambasted the practice in his State of the Union address earlier this year.

Hyatt's alleged hidden fees

The Texas case specifically notes resort fees levied at San Antonio's Hyatt Regency Hill Country Resort and Spa, which charges a $40.86 nightly resort fee (which includes a $35 nightly resort fee plus applicable state and local taxes). The fact that Hyatt includes these taxes with the resort fee is an acknowledgment that the resort fee is actually part of a nightly rate and not a separate charge, the attorney general notes in the lawsuit.

The lawsuit also used a $25.69 resort fee (which includes a $22 base fee plus applicable state and local taxes) at the Hyatt Residence Club San Antonio, Wild Oak Ranch as an example.

The Texas attorney general notes the Hyatt Regency Hill Country Resort had the potential to make as much as roughly $7.5 million annually from resort fees, assuming the 500-room hotel was sold out every night for a year. Using similar math, the Hyatt Residence Club San Antonio had the potential to make about $2.7 million from resort fees.

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Hyatt's potential defense

The sticking point of many of these lawsuits is how transparent a hotel company has to be.

The Texas attorney general's lawsuit notes that nowhere in the booking process was the overall final rate quoted to the customer; it's not until checkout that the customer learns of the exact total with these fees included.

While Hyatt's defense will likely look a lot like Marriott's in its case, Hyatt does note early in the booking process that an added resort fee will eventually be added to the overall nightly rate. Marriott often pointed to how it similarly labeled these fees in blue boxes early in the booking process.

"As a matter of practice, we do not comment on pending litigation, but we are aware of this industry-wide topic," a Hyatt spokesperson said in a statement to TPG. "While we are transparent in how we disclose fees in our booking process today, our priority is to care for our guests, so we have been actively working on enhancements to the guest booking experience through our display of rates, fees and inclusions. We will continue these efforts for the benefit of our guests and plan to implement changes in the coming months."

If that sounds a little familiar, it's because Marriott CEO Anthony Capuano used similar verbiage on a recent investor call regarding the company's new policy of including resort fees in the publicly displayed hotel rate. Marriott maintained that it has been transparent all along in displaying resort fees, but it was the first to bundle them into nightly rates as part of the settlement in Pennsylvania.

Will that become the new norm? Capuano wasn't ready to weigh in.

"It is not as if those were hidden somehow. We're simply further clarifying and enhancing that transparency," he said on the company's first-quarter earnings call earlier this month. "I will leave it to the state [attorney general] around the rest of the country for the rest of the industry. But I am pleased that we will lead the industry in terms of the transparency of our disclosure for our guests."

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