If you're making summer or fall travel plans, be prepared for an increase in some of the advertised prices, which, believe it or not, is good news for consumers.
It's the result of a new California law aimed at bringing transparency to resort fees, service fees, host fees and other “drip pricing” that often inflate consumers' bills beyond the initially announced rates, especially in accommodation and restaurants. Under California law known as SB 478, which goes into effect July 1, companies selling their products in California must now include mandatory fees in their initial advertised prices.
“The price you see is the price you pay,” said California Attorney General Rob Bonta.
The law has received a lot of attention for its potential effects on struggling restaurants, many of which have imposed service fees since the arrival of the pandemic. (In fact, one lawmaker has proposed a last-minute exception to exclude restaurants.) But the law also brings big changes for travelers and that industry, especially when it comes to the “resort fees” that many hotels automatically charge, saying they cover services and amenities like access to a pool and gym.
By putting a separate label on those rates, hotels have been able to advertise lower daily rates, an advantage when consumers compare prices. Now the hundreds of American hotels that have been adding “resort fees” to their daily rates will have to include them in the advertised rates seen by California consumers.
At first glance to an online consumer, it may appear that the new rules have raised the cost of a $149 room from $20 to $50 per night. In fact, hoteliers are simply disclosing all pre-tax rates up front as required, a change that may allow consumers to make better cost comparisons.
Cleaning fees should appear sooner
Meanwhile, the same law requires vacation rental hosts to include service and cleaning fees from the beginning.
This follows an initial voluntary step taken by Airbnb in 2022. Under pressure to be more transparent, the company added a digital “toggle” switch that allows customers to initially see a base daily rate or a total showing how much those would add up. secondary rates. the daily rate. Now, Airbnb officials have said, customers in California will automatically see the “total before taxes” number.
In practice, the new requirement means that instead of quoting a rate of $150 per night to some search page visitors, an Airbnb host would have to inform all consumers in advance that a five-night rental will cost $1,050. dollars (the daily rate of 150 dollars). plus a $150 service fee and a $150 cleaning fee) – effectively $210 per day, before taxes. This will cover any destination a California-based consumer is considering, an Airbnb representative said.
Vacation rental company VRBO shows consumers two prices on its navigation pages: the base nightly rate in larger, bolder type and the total price in smaller, simpler type, with no need to toggle.
Although the new law is aimed at any business that sells to Californians, many out-of-state businesses may not immediately comply. If you're planning a trip outside of California, carefully check what costs your potential accommodation discloses and what it doesn't. (But if you're heading to a country within the European Union, don't worry: the EU already requires companies to advertise using their full cost, taxes included.)
“It's about uncovering the hidden fees that are everywhere in our economy. It’s pretty broad,” said Jamie Court, president of Los Angeles-based Consumer Watchdog. He noted that if violators ignore warning letters, they can face penalties of $1,000 per violation (potentially including other damages and attorney fees).
Although this change will alter some hotels' strategies to increase profits, the changes may also give hoteliers a better chance of winning back customers from short-term rental companies, which have cornered a sizable share of the travel market since inception. of Airbnb in 2007. .
Lynn Mohrfeld, president and CEO of the California Hotel & Lodging Assn., said the group supported the legislation in Sacramento because it should provide a “level playing field” between hotels and vacation rentals. “If everyone does it the same way, it will be a better shopping experience for the consumer.”
The California law is unlikely to change base rates for airlines or rental cars, industry experts said, because the additional fees those companies charge are typically for voluntary services and items, such as preferred seating and insurance.
California Lawyer. General Bonta has noted that the transparency law does not increase or reduce any prices, but does require more clarity and aims to reduce “junk rates” and “trickle prices.”
How Resort Fees Became Huge
Although many hotels do not charge resort fees, the practice has grown dramatically since the late 1990s, especially in vacation destination areas such as Las Vegas, Palm Springs and San Diego. Rates typically range from $20 to $50 per night.
According to one estimate, the US hotel industry in 2017 earned $2.7 billion in resort fees. Lauren Wolfe, an attorney for consumer advocacy group Travelers United and founder of KillResortFees.com, has called resort fees “the most deceptive and unfair pricing practice in the hotel industry.”
As consumer sentiment against the fees has grown, public officials have filed several court challenges across the country, including a lawsuit against Marriott International by Pennsylvania's attorney general. That lawsuit led to a settlement in 2021, which led to Marriott's announcement in May 2023 that it would begin including resort fees in the website's initial search results. Hyatt followed with a similar change in July 2023, Hilton in September.
In 2023, President Biden denounced tourist fees and the Federal Trade Commission proposed a rule targeting junk fees and related practices. A Junk Rate Prevention Act was introduced in the Senate in March 2023, followed by a Hotel Rate Transparency Act in July, but so far Congress has taken no action.
In the meantime, some questions remain about how the travel industry will respond to California's transparency law. For example: What about companies that continue to advertise the lowest version of their rates in large print, while revealing the true full price in smaller print?
“That appears to violate the intent of the law,” the court said, but “it is up to the court to resolve it.” “Companies are going to reach the limit.”
For those ready to make hotel or rental property reservations, a second new state delay could also help: Starting July 1, under legislation known as SB 644, California consumers must have 24 hours to cancel most accommodation reservations without any charge, as long as the consumer has made the reservation at least 72 hours before arrival. The law includes hotels, rental agencies and third-party reservation services.
