Four state attorneys general, representing Colorado, Oregon, Pennsylvania, and Texas, have announced settlements with Choice Hotels International, Inc.
(JD Supra).
Choice Hotels, known for operating popular brands such as Quality Inn, Sleep Inn, and Econo Lodge, had come under scrutiny for its practice of charging undisclosed “resort” fees.
The undisclosed fees issue, also referred to as “drip pricing,” is not a new problem in the hotel industry. Drip pricing refers to the strategy of advertising only part of a product’s price upfront and revealing additional charges later in the buying process. This widespread practice has been drawing the attention of regulators and law enforcement, and recent actions suggest a more substantial intervention against it.
The terms of the settlement with Choice Hotels were not fully articulated in the initial announcement. However, it is reported that the agreement includes changes to how the hotel chain discloses additional fees, a crucial step seeking to assure transparency for consumers in the hotel booking process.
Choice Hotels joins a growing list of companies held accountable for undisclosed fees. Recently, Marriott International had to pay out millions in settlements in similar cases regarding hidden resort fees. This case serves as a wake-up call to the hospitality industry, signaling that greater attention is being given to honest pricing practices and transparency.
Legal professionals dealing with compliance and corporate behavior need to be aware of this trend. It signifies an uptick in the attention given to pricing practices by regulators and offers insight into how regulators are prioritizing consumer protection issues. This shift could require significant adjustments in existing pricing strategies to ensure they meet the evolving legal expectations.