- The FTC adopted a new rule prohibiting hotels from hiding mandatory fees when advertising prices.
- The rule aims to provide transparency for consumers and save them billions of dollars in hidden fees.
- The rule is expected to go into effect after a period of public comment and potential legal challenges.
Travelers will soon not have to worry about paying those hidden fees that end up ballooning their final bill when checking out of accommodations.
The U.S. Federal Trade Commission passed a final Junk Fees Rule on Tuesday to ban “unfair and deceptive pricing practices” that hide total prices for various industries, including short-term lodging. It won’t prohibit businesses from having these fees but make them display total costs upfront.
“People deserve to know up-front what they’re being asked to pay – without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid,” FTC Chair Lina M. Khan said in a statement. “The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time.”
The FTC predicts the new rule could save consumers up to $11 billion over the next decade, along with 53 million hours annually that would otherwise be spent trying to figure out the true total cost.
The Biden Administration began cracking down on hidden junk fees in 2022, which President Joe Biden said “hit marginalized Americans the hardest.”
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Here’s what to know about the final Junk Fees Rule.
Payments for flight cancellations?DOT considering a new rule.
What does the new FTC rule mean for travelers?
Unfortunately, travelers have been putting up with hidden fees for years. A 2023 NerdWallet analysis of more than 100 hotels found that the average resort fee was $38.82, accounting for about 3.9% of the nightly rate. In some instances, however, these fees exceeded 30% of the nightly cost.
“Properties do it to artificially reduce their online rates, so others need to follow because online travel shopping is very rate driven,” said David Sherwyn, professor of hospitality human resources and law at Cornell University, in a statement.
Under the new Junk Fees Rule, all short-term rentals and hotels must “clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price” and cannot “misrepresent any fee or charge” when advertising to consumers.
The true total price must also be shown more prominently than other pricing information. Breakdowns of pricing are allowed, but they can’t overshadow the real cost.
The last part of the new rule requires businesses to disclose “the nature, purpose, identity and amount of those fees before consumers consent to pay,” such as resort fees, Wi-Fi fees or other taxes.
Sherwyn added that hotels will likely find other ways to account for the revenue these fees bring in: “This raises a number of questions hotels will have to address however, for example, the fact that the resort fee, not the room rate, increases revenue when there is more than one person in the room. So, will hotels raise rates and let single guests subsidize the room with multiple guests? Or, will they charge for extra people in the room? And will people then start to lie?”
Some industry players, such as the American Hotel & Lodging Association (AHLA), applaud the new rule for setting a national standard for the lodging industry. “For years, AHLA has been leading the charge to establish a single, federal standard for lodging fee display across the industry because consumers deserve to have transparency no matter where or how they book their stays,” said AHLA President & CEO Rosanna Maietta in a recent press release.
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