Consumer watchdog accuses popular hotel chain of gouging customers with ‘bait and switch’ pricing — despite new FTC rule banning ‘drip pricing.’ How this deceptive tactic could be costing you

Padgaonkar found that a two-night stay at a Little America two hours north in Flagstaff jumped 21% higher than the advertised rate. While the hotel’s online calendar listed prices of $124 and $195 per night, clicking through showed an average of $193.50 — a major increase from the expected $159.50 average for two nights.

It’s classic “bait and switch,” he says.

An additional line added $14.12 per night in taxes and fees, which should total $28.24, but instead came to $44. The second night, originally advertised at $195, jumped to $263.

“This is essentially the electronic version of [a store shelf] showing one price, then charging more at the register,” Padgaonkar said.

20 nights, 13 price jumps

Reporters with 12News randomly sampled six Little America Hotels across five states: Utah, Wyoming, Idaho, California and Arizona. Out of 20 nights, 13 showed higher totals than the advertised price – the same pattern Padgaonkar discovered.

The biggest offenders were Flagstaff, Salt Lake City and San Diego, with prices as much as $30 more per night than advertised.

Padgaonkar told 12News that he first noticed the pricing issues last year, and he says the potential cost to consumers is staggering.

“The concern is, you know, $30 more, $60 more, $100 more per booking, and millions of bookings over how long? That could be an enormous amount of overcharge,” he said.

This comes on the heels of a new rule banning “unfair or deceptive fees,” introduced by the Federal Trade Commission (FTC) in May. The rule mandates that hotels disclose the “total price upfront.”

When 12News asked Little America for a response to how long the problem has existed, how many customers were impacted and whether the it will self-disclose the issue to the FTC or Attorneys General in Utah and Arizona, the company responded with the following statement:

“This matter was recently brought to our attention. We are performing an investigation and will act accordingly.”

Padgaonkar says he hopes Arizona Attorney General Kris Mayes, who recently led a price deception crackdown on Family Dollar, will investigate Little America.

He told 12News that he phoned a Little America located in Utah on July 4 to walk a reservations agent through the pricing discrepancies. According to Padgaonkar, the hour-long call was recorded by Little America and ended with the agent admitting the issue was “disturbing,” before adjusting the reservation to the lower rate.

“The employee honored the lower cost for the hotel stays,” he said. “I don’t know if I’ll keep the reservation, but for now I have the room booked.”

Days later, 12News reported that the company had removed nightly prices from the calendar view on its website.

“While I appreciate the hotel acknowledging the problem and taking quick action, it still leaves many important questions unanswered,” Padgaonkar said. “Will they make the customers whole by honoring the lower prices shown?”

New rules in play

The FTC’s new rule on “unfair or deceptive fees” aims to also get rid of “drip pricing,” which is when a hotel advertises a low room rate and then adds mandatory fees such as resort fees, service charges and other costs at checkout.

Not only is the bait and switch issue a timely one, it could also be costing consumers a lot of money. The FTC estimates that the new rule will save consumers up to 53 million hours per year of time spent searching for the “total price.” The time savings is equivalent to more than $11 billion over the next ten years, says the agency.

A Consumer Reports survey found that 34% of travelers encountered surprise hotel fees at checkout. And that’s just one sliver of a much bigger issue.

"Junk" or hidden fees are unexpected charges that aren't clearly disclosed up front. They might show up as resort fees, service fees, booking charges or convenience fees.