Texas Attorney General Sues Hyatt for Allegedly Duping Consumers With Hidden Fees

A Hyatt Place hotel sign marks its location in Carnberry, Pa., on May 4, 2017. (Keith Srakocic/AP Photo)

Texas Attorney General Ken Paxton filed a lawsuit against Hyatt Hotels for violating the state’s consumer protection laws by “marketing hotel rooms at prices that were not available to the public as advertised.”

Paxton’s lawsuit accuses one of the largest hotel chains in the country of engaging in “false, misleading, and deceptive acts and practices” in violation of the Texas Deceptive Trade Practices Act (DTPA) (pdf).

“Hyatt’s lack of transparency regarding hotel room prices has misled consumers and violated Texas law,” Paxton said in a statement.

“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.”

The Chicago-headquartered Hyatt Hotel Corp. operates more than 1,150 hotels in 70 countries across the world as of Dec. 31, 2021, according to its website. It operates more than 65 hotels in Texas under brand names, including Hyatt, Grand Hyatt, Hyatt Regency, Hyatt Place, and Thompson Hotels.

Paxton says that the advertised daily room is not the “actual price of the room” if the mandatory fee is not included in the advertised nightly rate.

“Hyatt is violating Texas law by marketing hotel rates at prices that are not available as advertised,” the lawsuit reads.

During the checkout process, the hotel adds undisclosed taxes and fees, according to the lawsuit. In order to understand the breakdown of the “taxes and fees,” the consumer must expand the pricing details.

In some cases, the hotel charges resort fees for amenities, such as access to a fitness center or Wi-Fi, regularly offered at non-resort properties.

“Consumers are often surprised by mandatory hotel fees that are belatedly added to their room rate,” the lawsuit reads.

The Federal Trade Commission (FTC) describes the practice as “drip pricing.”

Drip pricing is “a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process,” according to the FTC.

Paxton says even when the hotel eventually discloses the fees, it’s done in a manner that is unlikely to alert the buyer that the rate advertised was not the actual room rate.

“These deceptive practices enabled Hyatt to advertise lodging at artificially low rates, and it must end immediately,” Paxton said.

Marriott Settlement

On May 16, Paxton announced a settlement with Marriott International Inc. regarding the hotel chain’s hidden fees and costs not included in advertised nightly room rates.

Paxton said his office has been working to ensure hotel chains and other companies in the travel industry provide pricing transparency for consumers.

“Because of this settlement, Marriott will take additional steps to guarantee that the advertised cost of the room is representative of what consumers will be charged,” Paxton said. “Marriott is now taking steps to promote price transparency.

The Maryland-based hotel chain has over 8,100 properties across the globe, according to its website. The company has more than 600 properties in Texas.

Marriott agreed to “clearly and conspicuously” disclose all “resort fees,” and the total price of the room will be listed as the “most prominently displayed price,” according to the release.

The pricing breakdown must list resort fees separately from taxes or other government-imposed fees.

Junk Fee Prevention Act

Earlier this year, President Joe Biden called on Congress to pass the Junk Free Prevention Act to protect consumers from the hidden fees not included in the advertised prices for hotel rooms and other common purchases such as concert tickets.

“Industry advocates argue that these fees are simply bundling together popular add-ons in a way that saves consumers money,” the White House said in a press release. “If this were true, these bundled add-ons would be offered as an add-on bundle as opposed to a mandatory fee, highlighting how this argument lacks merit.”