Hotels Race to Comply with California’s Junk Fee Laws



The lobby of the Hotel del Coronado in San Diego California source laredawg creative commons flickr

Come July 1, U.S. hotels will need to comply with a California state law that requires upfront disclosure of the total cost — including all mandatory fees — of hotel rooms, among other travel services like short-term rentals and cruises.

California Senate Bill 478 was designed to expose hidden “junk fees,” and marks a shift toward transparency about non-optional charges, including resort, destination, and parking or facility charges. A similar law, AB 537, creates the same restriction to let consumers do quick and accurate cost comparisons upfront.

The laws pose a compliance challenge for hotel operators selling directly and through third parties like Google and online travel agencies.

“We’re hearing from, hotels, large and small, varying levels of comfort with the implementation deadline looming,” said A.J. Rossitto, the advocacy director of the California Hotel and Lodging Association. “Definitely some implementation pains as folks are getting it sorted out, and it’s kind of a race to the finish at this point.”

California Hotel Operators Get on Board

Maulik Pandya, whose management company runs hotels in California, said his properties are now compliant after a week-and-a-half of work.

For example, Pandya runs an independent property on Route 66 in Victorville called GT Hotels Inn & Suites Extended Stay.

“I had to make sure all the OTAs [online travel agencies] and our own website list all the mandatory fees, mainly a resort fee,” Pandya said. “I updated all the rates and codes in the property management system, the revenue management system, the channel manager, and all the OTA extranets.”

Updating rates on countless smaller online travel agencies has been the biggest hurdle for some owners.

“It was straightforward to update the rates in the owner portals for main brands like Expedia and Booking.com,” Pandya said. “But I don’t have portal access for all the subsidiary brands of Expedia Group, like Hotwire, and of Booking Holdings, like Agoda. Smaller OTAs keep displaying the wrong rates, and I’ve had to call to try to get things updated, and it’s been frustrating.”

Tech Is Mostly Not a Problem

Last-minute hiccups aside, most hotel owners don’t anticipate a problem on July 1, according to Laura Lee Blake, president and CEO of the Asian American Hotel Owners Association (AAHOA) — whose 20,000 members own about 60% of the country’s hotels.

Broadly speaking, small and large hoteliers have the existing tech tools to display advertised prices in compliance with the law.

“Getting into compliance with the California regulations should not be an issue for most hotels, even independent ones,” said Sebastien Leitner, vice president of partnerships at Cloudbeds, a property management system. “Transparent pricing is already standard in Europe — including showing the total cost to travelers for a stay — so any hotel technology platform serving a global market would already have the capability to comply with these regulations.”

However, for smaller operators like Pandya, the struggle is real.

“As a generalization, I don’t believe independent hotels are ready to be in compliance because independent hotels operate with more constrained budgets,” said Mark S. Adams, a partner at the California law firm Jeffer Mangels Butler & Mitchell (JMBM).

“Also, smaller operators don’t seem to be fully aware of the new law and its requirements,” Adams said.

Even especially conscientious operators face headaches.

“There are also a few online travel sites like Skyscanner or the app Super.com where there’s no portal access for owners, and I am trying to navigate how to get our rates to correctly display as we don’t know where they’re getting their feeds for rates,” Pandya said.

A National Ripple Effect?

California’s move could be the first domino in a nationwide shift toward pricing transparency. Minnesota has already passed similar legislation.

Wary of a patchwork of state regulations, the American Hotels & Lodging Association is pushing for federal standardization.

The hotel industry broadly prefers that the federal government step in with nationwide regulations to streamline operational challenges.

In October, President Biden announced efforts to address junk fees. The Federal Trade Commission (FTC) proposed a rule to ban misrepresentations of total costs. In February, the American Hotel and Lodging Association submitted a letter on the FTC’s proposed rule, which remains under consideration along with 12,000 other comments.

A National Solution?

Meanwhile, the main national effort against junk fees came earlier this month when the U.S. House of Representatives passed a bill for essentially a national version of California’s law.

“Rep. Kim is thrilled that the No Hidden Fees Act passed the House and hopeful for swift passage in the Senate to provide cost transparency as families budget for trips,” said a spokesperson for Representative Young Kim of California, who co-sponsored the House bill. 

However, a counterpart piece of legislation in the Senate has stalled. The Hotel Fees Transparency Act (2498) introduced by Sen. Amy Klobuchar (D-MN) and Sen. Jerry Moran (R-KS) in the Senate a year ago would require anyone advertising a hotel room or a short-term rental to clearly show, upfront, the final price a customer would pay to book lodging. It would make the Federal Trade Commission responsible for pursuing violations.

Optimism for a Nationwide Fee Law

The bill was referred to the Senate Committee on Commerce, Science, and Transportation, where it has apparently stalled. Senator Klobuchar’s press office didn’t immediately respond to a request for comment.

“We’re hoping to avoid having multiple standards across multiple states,” said Rossitto of the California hotel lobby. “When you create a patchwork of statutes that don’t align, implementation becomes much more difficult, especially if you’re a hotel owner with assets in multiple states and you have to create customized solutions and processes.”

A key difference between the Senate and House bills is that the Senate has a provision that requires hotel companies to share accurate rate information with online players. That’s according to Laura Knapp Chadwick, president and CEO of the Travel Tech Association, which has helped work on the Senate bill.

Chadwick said the Senate bill currently also requires intermediaries, such as online travel agencies, to have a clear way for hoteliers to complain if something needs fixing, such as the accidental display of so-called rogue rates.

“For 916 to move forward, it will need to be reported out of the committee and then passed by the full Senate before being reconciled with any House versions and sent to the President for signing,” said Adams of JMBM. “That’s a lot.”

Yet others say there are reasons for optimism a national law will get passed.

“All the key players support it, and it’s bipartisan, so we are very optimistic a bill will come out of reconciliation by the close of the [legislative] session,” Chadwick said.

Supporters include hotel groups like Hilton.

“We support legislation introduced in the U.S. Senate and U.S. House to establish a uniform standard for mandatory fee display across the entire industry – from hotels to online travel agencies to metasearch sites and short-term rental platforms,” a Hilton spokesperson said. “We continue to work with the federal bill sponsors to ensure any final legislation that may be signed into law captures this standard.”

Transparency Is the New Black

A hotel era of hidden fees may be ending, as we previewed it might in Skift’s Megatrends for 2024. Non-compliance with California’s legislation has a steep cost: $1,000 per infraction, plus potential additional damages and legal fees.

California’s move may also force some hotels to rethink their pricing strategies and potentially squeeze margins for those who relied heavily on hidden fees. Skift will watch the shake-out after July 1.

For now, most hotel owners seem to be embracing a level playing field.

“We’re all in agreement that it makes sense that guests should know up-front what they will be paying,” said Blake of AAHOA. “Everybody hates surprises.”

Major Hotel Groups Say They’re Ready

Major hotel chains, including Choice Hotels, Hilton, InterContinental Hotels, Marriott, MGM Resorts, Sonesta, and Wyndham have adjusted their pricing systems to comply with the new law. We asked if they felt ready for the July 1 deadline, and here’s what Skift heard back.

  • Marriott: “We are committed to providing customers with clear and transparent pricing and have long been focused on ensuring that any mandatory fees charged by hotels are clearly stated prior to booking,” a spokesperson said. “In May 2023, we updated the room rate display on Marriott.com and our app to include the mandatory fees in the initial display of price, leading the industry on this important issue. We also provide mandatory fee information to our distribution partners, improving the customer search experience broadly.”
  • Hilton: “We have implemented enhancements to Hilton’s websites and apps to ensure mandatory fees are displayed upfront,” a spokesperson said.
  • Hyatt: “The most prominent rate shown throughout the booking process on Hyatt channels for properties in the Americas currently includes both the room rate and any resort or destination fees implemented by hotels,” a spokesperson said. “Hyatt complies with all local consumer regulations and is working to display any additional mandatory fees (excluding government-imposed taxes or fees) by July 1, 2024.”
  • Wyndham: “Mandatory resort fees are not common in our economy and midscale core, but when they are charged, they are clearly and prominently displayed prior to completion of booking,” a spokesperson said. “We are committed to price transparency and ensuring compliance with all upcoming laws and regulations.”
  • Choice Hotels: “We’re committed to making sure that any resort or other automatic fees charged by hotels in the U.S. are disclosed through our booking channels. Consistent with guidance from the State Attorneys General, Choice discloses such fees, with the total room price displayed on our web pages throughout the booking journey. As a result, we are fully compliant ahead of the State of California’s new law, as well as the proposed FTC rule, should it become final.”



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