Donald Trump’s Scottish golf course hidden fees highlight how companies are screwing us over all the time

Considerable tranches of the UK markets are, apparently quite legally, distorted by what’s sometimes known as 'drip pricing'

Ben Chu
Sunday 25 March 2018 14:37
Comments
Donald Trump brings illegal US-style 'resort fees' to UK for first time, Simon Calder reports

Donald Trump versus Simon Calder. There was only ever likely to be one winner. Thanks to The Independent’s indefatigable travel correspondent the £20 “resort fee” that Trump’s Scottish golf course, Turnberry, had attempted to impose on its guests has been pretty swiftly removed by its managers.

Simon’s hand was doubtless strengthened by the fact that such concealed-but-compulsory charges for things like wi-fi, swimming pool access, in-room coffee machines etc are actually illegal here in the UK.

And long may it remain so. This is one kind of American import against which we should resist as vigorously as Trump himself seeks to repel Chinese steel and Mexican-made cars.

Eric Trump: "We made Turnberry great again"

A report commissioned by the outgoing Obama administration in 2016 notes that such sneaky fees in the American hospitality industry extorted more than $2bn (£1.4bn) out of Americans in 2015. Despite only being introduced in the late 1990s such fees have metastasised and now make up almost a fifth of the revenues of US hotels.

But before we get self-congratulatory about our enlightened proscription of resort fees, we might remember that considerable tranches of our own markets are also, and apparently quite legally, distorted by what’s sometimes known as “drip pricing”.

On my way to Darlington from London on Virgin’s East Coast mainline last week I logged on to the train’s “free” wi-fi to discover that it was only complimentary for those who had booked their ticket directly through Virgin’s website, something I suspect very few of their customers actually do. So to get online for a couple of hours I had to fork out £5.

There are plenty of other examples of sharp selling. Those who hire a car at a UK airport will still often find all manner of unexpected compulsory additions wrung out of them upon arrival, such as insurance and refuelling. And of course there are those notorious excess baggage charges from airlines.

The tricks can be subtle too. An entire industry exists to create “strategic choice architecture” to exploit our psychological frailties over pricing. Sales assistants are trained to “upsell”, flogging everything from pointless insurance for small household electronics to extra fries with your hamburger. And have you noticed how clothing retailers’ seasonal “sales” now actually tend to cover most of the year? And why are printers so cheap, yet the replacement cartridges so expensive?

Is it something to worry about though? Doesn’t it all even out in the end, as we get wise to the scams and tricks over time? Doesn’t the free market work its magic?

Possibly not. The White House report into drip pricing concluded that such charges aren’t just an irritation, but do wider economic damage by interfering with the price signals that free markets need to function efficiently.

If you think a room is on sale at $80 you might consider it decent value and book it. But if you’d known the real price was actually $110 you might not have. Or perhaps you might have booked a different hotel with an all-in fee of $90.

Yet if that $90 hotel had needed to compete with the headline prices offered by a dishonest one, it too might have had to conceal it’s own true room price, adopting a spurious resort fee of its own. And so on and so on. It’s easy to see how a market can quite soon become corrupted.

The rise of price comparison websites seems to have accelerated this race to the bottom on tariff opacity in some markets. As we do an increasing amount of our shopping and purchases online, this problem will likely grow.

When people are making a decision on a one-off purchase remotely, based on headline quoted price, they are inherently vulnerable to exploitation.

Vendors should put their houses in order and ensure genuine price transparency. If they will not – or cannot – more will be expected of regulators. And the longer the “drip-off” continues, the heavier the hand of that intervention is liable to be.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

By clicking ‘Create my account’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged inPlease refresh your browser to be logged in