Beginning on July 1, U.S. hotels will need to adhere to a California state law that requires transparency in disclosing the total cost, including all mandatory fees, of hotel rooms, as well as other travel services such as short-term rentals and cruises. Senate Bill 478 and AB 537 aim to reveal hidden fees and make it easier for consumers to compare costs upfront. This poses a compliance challenge for hotel operators, both in direct sales and through third-party platforms such as Google and online travel agencies.
Hotel operators in California are working to comply with the new law by updating their listing of mandatory fees on various platforms. While larger hotels have existing tech capabilities to ensure compliance, smaller operators may face challenges with updating rates on numerous online travel agencies. However, most within the industry are optimistic that hotels will be ready by the July 1 deadline, recognizing that pricing transparency is becoming standard practice globally.
California’s move towards pricing transparency could spark a nationwide shift in the industry. Minnesota has already passed similar legislation, prompting the American Hotels & Lodging Association to advocate for federal standardization of pricing regulations to streamline operations across the country. Efforts at the national level to address junk fees are underway, with President Biden announcing initiatives to combat misleading total cost representations and the American Hotel and Lodging Association submitting a letter in support of the FTC’s proposed rule.
Though a national bill similar to California’s law has passed in the House of Representatives, its progress in the Senate has stalled. The Hotel Fees Transparency Act introduced by Senators Amy Klobuchar and Jerry Moran would require full disclosure of the final price for booking lodging. The industry is hopeful for a national law to avoid inconsistencies across states and ensure clarity for consumers. Major hotel groups, including Choice Hotels, Hilton, and Marriott, have already made adjustments to comply with California’s law and are ready for the July 1 deadline with upfront pricing display on their platforms.
As hotels prepare to comply with new pricing transparency regulations, the industry anticipates a shift away from hidden fees and towards a more level playing field for consumers. Non-compliance with the legislation in California could result in costly penalties for hotels, possibly leading to pricing strategy revisions and tighter margins. Despite the initial challenges of implementation, hotel operators are embracing the changes and recognizing the importance of upfront pricing information for guests. Though the landscape of pricing regulations may be evolving, hotels are adapting to meet the new standards and prioritize transparency in their pricing practices.
