For more than a decade, Marriott International has been misleading guests about hotel room prices and earning millions in profits as a result, according to a lawsuit filed Tuesday by D.C.’s attorney general.
The complaint, filed in D.C. Superior Court by Attorney General Karl A. Racine, says Marriott used a “deceptive” and illegal trade practice called “drip pricing” to lure consumers.
The filing says the Bethesda-based hotel chain hides the true cost of its rooms from consumers shopping on its website or on third-party hotel reservation sites such as Expedia.
Daily room rates are posted, but as the consumer selects a room and provides a credit card to reserve it, Marriott often adds a “resort fee,” an “amenity fee” or a “destination fee” ranging from $9 to $95 per day, the complaint alleges.
Because of that, the complaint says, customers comparison shopping online are misled into thinking the Marriott room is less expensive than it is.
“It robs consumers of the ability to make an apples-to-apples comparison,” said Jimmy Rock, assistant deputy D.C. attorney general.
Often, the resort fee is included in the “taxes and fees” charge, which leads consumers to believe the extra fees go to the government, not to Marriott, the complaint says.
The lawsuit follows an investigation by the attorneys general of 50 states and the District into competitive hotel industry pricing and its effect on customers.
The investigation identified 189 properties owned or managed by Marriott where “resort fees” have been charged.
Marriott spokesman Jeff Flaherty declined to discuss the complaint. “We don’t comment on pending litigation,” Flaherty said in an email, “but we look forward to continuing our discussions with other state AGs.”
None of the 29 hotels that Marriott manages or owns in the District was found to use the practice, Racine’s office said. But D.C. residents who have stayed at Marriott properties elsewhere have been victims of false advertising, the complaint says.
The lawsuit alleges Marriott has violated the D.C. Consumer Protection Procedures Act by “hiding the true price of hotel rooms, failing to clearly disclose all booking fees, misrepresenting that resort fees are imposed by the government, and misleading consumers about what resort fees actually pay for.”
Marriott began the “deceptive and misleading” practice of “drip pricing” in 2008, Rock said.
“They quickly realized, ‘Wow, we’re making a lot of additional profit off this,’ ” said Rock, who estimated that the practice yielded at least $100 million annually for Marriott. “It grew very quickly over the next couple of years as a practice inside Marriott.”
In 2012, the hotel chain, along with 21 other operators, was warned by the Federal Trade Commission that the practice could violate federal consumer protection law.
Rock said other hotel chains are also under investigation but declined to name them.
The lawsuit provides an example of booking a Marriott hotel room at Renaissance Las Vegas Hotel in June. The initial price was $219. The final price was $282.32 — a $63.32 increase for “taxes and fees.”
The lawsuit seeks to stop Marriott from misleading consumers and advertising misleading prices. It also seeks civil penalties as a deterrent.
Rock said Marriott could pay up to $5,000 for each time an inaccurate price was presented to a consumer.
Separately, Marriott was notified Tuesday by the United Kingdom’s Information Commissioner’s Office (ICO) that it plans to fine the company more than 99 million pounds, or nearly $124 million, after investigating a data breach of guest reservations at Starwood hotels, which is owned by Marriott.
The personal data contained in 339 million guest records were exposed globally by this cyberincident, the ICO said in a statement. It included names, mailing and email addresses, phone numbers, passport numbers, birth dates, gender, arrival and departure information, Starwood accounting information, reservation dates, communication preferences and encrypted payment information.
Starwood’s online systems were first compromised in 2014, two years before Marriott acquired it. Guests who made reservations at any Starwood hotels on or before Sept. 10, 2018, could be affected.
The ICO said the company has cooperated with the investigation but found it “failed to undertake sufficient due diligence when it bought Starwood and should also have done more to secure its systems.”
Arne Sorenson, Marriott International’s chief executive and president, called the data breach a “criminal attack” and said the company plans to contest the fine.
An earlier version of this story incorrectly said that authorities estimated Marriott earned $100,000 annually from “drip pricing.” The hotel chain is estimated to have earned $100 million annually from the practice. This story has been updated.