Hotels Race to Comply with California's Junk Fee Laws (2024)

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 & SuitesExtendedStay.

“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 allthe 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 appSuper.comwhere there’s no portal access for owners, and I am tryingto 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 theTravel TechAssociation, 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.

“Wesupport 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 feesare 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’recommitted to making sure that any resortor other automatic feescharged 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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Hotels Race to Comply with California's Junk Fee Laws (2024)

FAQs

What are the new hotel laws in California? ›

California Assembly Bill 537: Transparency in pricing

Inclusive pricing: All advertised room rates must include mandatory fees, excluding government taxes. This means no more hidden resort fees or charges that might surprise guests at checkout.

Are hotel resort fees illegal? ›

Currently, hotel resort fees can be viewed as illegal based on existing state consumer protection laws. Numerous bodies have authority on this issue in the United States, including the U.S. Congress, state legislatures, the Federal Trade Commission, and the National Association of Attorneys General.

Who regulates hotels in California? ›

The Lodging and Institutions Program conducts inspections of hotels, motels, interim housing, boarding schools, and boarding homes, including rooming houses, home for the aged, sober living facilities, boarding houses, lodging houses, and bed and breakfast facilities.

How much does the average hotel cost in California? ›

The price of a hotel can vary by amenities, dates, and neighborhood. Based on thorough data from 5,073 hotels, the average hotel price in California is a very reasonable $221, and the median price is $170.

How long can you legally stay in a hotel in California? ›

The law draws a very clear line between a tenant and a guest. Guests who stay at a hotel or motel in California for less than 30 days in a row are considered “transient.” For example, a guest may stay at an Anaheim extended stay hotel for a week, pay in advance for the week, and then leave after the week.

What is the maximum amount of nights you can stay in a hotel? ›

In the U.S., it may be stated as 28 or 30 days, often on in a sign in the room. The reason for this is state law, which varies state to state, that anyone renting a space longer than that is not a guest but a tenant, and they are more protected under landlord-tenant laws, than hotel-guest laws.

Can I decline the resort fee? ›

You cannot simply refuse to pay resort fees, but — just as some hotel employees are occasionally empowered to compensate you — the employee might have authority to remove your resort fee. Just understand that this is the exception, not the norm. And while it doesn't hurt to ask, it helps to ask nicely.

Do you have to pay resort fees in California? ›

Good bye to junk fees, resort fees, mandatory service charges, and drip pricing. Hello to – the fruits of SB 478. Click here for the latest articles on Resort Fee Litigation.

Why did hotels start charging resort fees? ›

The fee was a way for hotels to pay for all these extra amenities without having to add to the base prices consumers see when they search for hotels. In other words, hotels would appear cheaper in internet searches, making them appear more competitive in price while offering a more robust experience once guests arrive.

How do I file a complaint against a hotel in California? ›

If a letter to the manager does not resolve the problem, you may want to file a complaint with the following: Department of Consumer Affairs. File a complaint online at www.dca.ca.gov or call 800.952. 5210 to have a complaint form mailed to you.

Where is the best place to complain about a hotel? ›

If you feel your issue was not resolved, contact the regional manager or another senior executive if the hotel or motel is part of a chain. Depending on the type of complaint, if it is not resolved, you may also contact the local health department or the state consumer protection office.

Is it cheaper to live out of a hotel? ›

Ultimately, there aren't many situations when living in a hotel is going to be cheaper than your rent or mortgage payment. Consider that the average hotel room cost is estimated at about $150 per night.

Do hotels charge per bed? ›

Hotel room rates are based on double occupancy. You usually don't have to pay extra for kids in the room. But hotels often charge $20 to $50 per additional adult per night, Banas says. To avoid this fee, you need to be aware of it before you book so that you can search for another hotel that doesn't charge it.

What's the difference between a motel and a hotel? ›

Motels are a kind of hotel. The word motel (from a blend of motor and hotel) typically implies a roadside hotel in which the doors of the rooms can be entered from outside. In contrast, hotel rooms are typically entered from inside the building. Motels are often less expensive and have fewer accommodations than hotels.

What is the guest policy in California? ›

California: Guests become tenants when they stay for over 14 days within six months, or seven nights in a row. Colorado: Guests become tenants after staying for over 14 days within six months. Connecticut: Guests become tenants after staying for over 14 days within six months.

What are the rights of the guest in the hotel? ›

Guests are entitled to the services promised at the time of booking, including a safe, clean room and access to advertised amenities. Conversely, guests are obligated to adhere to hotel policies, pay for services rendered, and respect the property and other guests.

What is the Hotel California effect? ›

A term "The Hotel California Effect" was then used to refer to the negative effect of financial regulations on investment, and the problems foreign investors faced when getting their money out of China.

What is the hotel tenant law in California? ›

It is unlawful for the proprietor of a residential hotel to require an occupant to move or to check out and re-register before that occupant has lived there for 30 days and therefore not gain the legal rights of a tenant (Civil Code section 1940.1).

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