Consumer Watchdog Sues Hotel Chain Over Alleged Deceptive Pricing Tactics

Consumer Concerns Over Little America Hotels' Booking Practices

Little America Hotels is under increasing scrutiny following allegations of potential price manipulation on its booking platform, which could be leading to unfair charges for customers. A consumer watchdog has uncovered what appears to be a deceptive pricing strategy that may be costing travelers more than they expect.

Abhay Padgaonkar, a data analyst known for identifying consumer fraud, has raised concerns about the hotel chain’s practices. He described the situation as a “rip-off of the customers,” where users are shown one price but charged another. According to Padgaonkar, this issue was first noticed last year and could have significant financial implications for consumers.

The Bait and Switch Tactics

Padgaonkar found that a two-night stay at a Little America Hotel in Flagstaff, Arizona, increased by 21% compared to the advertised rate. While the online calendar listed prices of $124 and $195 per night, the actual cost averaged $193.50, which is much higher than the expected $159.50 for two nights. Additionally, an extra line item 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.

Widespread Issues Across Multiple Locations

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—following 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 emphasized the potential impact on consumers, noting that even small price increases can add up significantly over time. “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.

New FTC Rule and Industry Response

This issue comes at a time when the Federal Trade Commission (FTC) introduced a new rule banning “unfair or deceptive fees.” The rule requires hotels to disclose the “total price upfront.” When asked about the issue, Little America responded with a statement saying, “This matter was recently brought to our attention. We are performing an investigation and will act accordingly.”

Padgaonkar hopes that Arizona Attorney General Kris Mayes, who previously led a price deception crackdown on Family Dollar, will investigate Little America. He also shared an experience where he called a Little America hotel in Utah to walk a reservations agent through the pricing discrepancies. According to Padgaonkar, the hour-long call was recorded by the hotel, and the agent admitted the issue was “disturbing” before adjusting the reservation to the lower rate.

Ongoing Questions and Consumer Impact

Despite the company’s response, many questions remain. Padgaonkar expressed concern about whether Little America will make customers whole by honoring the lower prices shown. Days later, 12News reported that the company had removed nightly prices from the calendar view on its website.

The FTC’s new rule aims to eliminate “drip pricing,” where hotels advertise low room rates and then add mandatory fees such as resort fees, service charges, and other costs at checkout. The agency estimates that the new rule will save consumers up to 53 million hours per year of time spent searching for the “total price,” equivalent to more than $11 billion over the next ten years.

A recent survey by Consumer Reports found that 34% of travelers encountered surprise hotel fees at checkout. Hidden fees, often referred to as “junk” fees, include resort fees, service fees, booking charges, or convenience fees.

State Laws and Consumer Protection

In addition to the FTC rule, several states have enacted similar laws. For example:

• California passed SB-478 in 2024, banning businesses from advertising prices without including mandatory fees.
• Minnesota introduced a law prohibiting hidden fees in food service, lodging, and digital sales.
• New York now requires all-in ticket pricing, with no surprise surcharges allowed.

There is also a multistate coalition of 19 states, including Arizona, Hawaii, and Pennsylvania, supporting the FTC’s rule and pushing for local enforcement.

As these new regulations take effect, consumers are increasingly aware of their rights and the importance of transparency in pricing. With ongoing investigations and legal actions, the spotlight remains on companies like Little America Hotels to ensure fair treatment of their customers.