Lawsuit Says Hilton Charged Resort Fees Under Guise of a Tax

By CONOR DOUGHERTY
Staff Reporter

A class action lawsuit alleging breach of contract and fraud has been filed against Hilton Hotels Corp. claiming the Beverly Hill-based company quoted a certain room rate to customers, only to add on extra non-tax charges when it came time to pay the bill.

The litigation is one in a string of lawsuits filed against major hotel chains this year, all by the same New York law firm targeting so-called "resort fees." Damages sought against Hilton were not specified; total damages sought in the other three cases were at least $210 million.

The Hilton suit, filed in Los Angeles Superior Court on July 30, was filed on behalf of Matthew Pecci and the general public.

After checking out of the Pointe Hilton South Mountain Resort in Phoenix in 1999, according to the complaint, Pecci discovered an $8 per night "resort fee" tacked on to his $165 bill. The fees were not disclosed to Pecci when he called to make reservations, the suit said.

"Hilton surprises guests with the undisclosed resort fee only when they arrive at the hotel or at checkout when it is too late for guests to challenge the fee or obtain alternative accommodations," said the complaint.

Hilton officials declined comment.

The complaint further alleges that "Hilton's Internet site falsely and fraudulently misrepresents the nature of the resort fee as a tax when, in fact, the fee imposed in its entirety or in significant part is paid to and retained by the defendants."

Representing the plaintiffs is Bragar Wexler & Morgenstern, a New York-based law firm that filed similar suits against Starwood Hotels and Resorts Worldwide, Marriott International Inc. and Wyndham International Inc. earlier this year.

Wayne Williams, president of Williams & Associates, an asset management firm for hotels, said some hotels charge resort fees because they may offer a higher level of service to customers. He added that others may do it in lieu of increasing room rates.

According to Morgenstern, none of the four chains he has filed suit against have filed a response.

A similar suit was settled last year against Carnival Cruise Lines claiming that port charges were excessive and that the bulk of such fees were actually kept as revenue.

In the Carnival case, plaintiffs were awarded $126 million in vouchers, which had a redeemable cash value of $20 million, according to Robert Schachter, a partner at Zwerling Schachter & Zwerling in New York, who filed the suit.

For reprint and licensing requests for this article, CLICK HERE.