Travelers should soon be able to say goodbye for good to those hidden resort, cleaning, and other sometimes vague hotel and vacation rental fees that have been surprising them upon checkout for years.
The Federal Trade Commission (FTC), which oversees consumer protection regulations, this week voted 4-1 to finalize a rule that will ban lodging companies and resellers from hiding mandatory and junk fees when they are advertising or displaying pricing.
That means when you search online for a hotel or short-term rental, the first price you see should have the total cost, excluding taxes or local government fees.
The rule, which is likely to take effect in May, (it goes into effect 120 days after being published in the Federal Register), also applies to live-event ticketing.
The ban on hidden fees comes after years of consumer complaints over hotels failing to clearly disclose mandatory fees. Among the most reviled: resort fees, which cover on-site amenities like the gym and pool, regardless of whether or not guests are using them. The American Hotel and Lodging Association (AHLA) said its most recent data shows only 6 percent of hotels nationwide charge a mandatory resort/destination/amenity fee, at an average of $26 per night. But a 2018 report from longtime hotel industry analyst Bjorn Hanson found that hotels collect nearly $3 billion a year in fees and surcharges on top of nightly rates.
Consumers have also complained about short-term lodging companies, such as Airbnb and Vrbo, failing to clearly show cleaning and other fees that are tacked on to nightly rates.
“People deserve to know upfront 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,” said FTC chair Lina M. Khan.
Most hotel companies and booking sites have already begun displaying prominently prices that include all fees and taxes, in response to a new state law in California and lawsuits by state attorney generals and others against hotel giants like Marriott, Hilton, MGM Resorts, Choice, and Hyatt. Airbnb, however, this week still listed in initial search results its prices exclusive of mandatory cleaning fees, although those fees are listed before final booking. Vrbo shows prices with all fees, but not taxes, on initial searches.
A lingering question, however, is whether the new FTC regulations, along with tougher compensation rules instituted by the Department of Transportation to protect fliers from costs associated with canceled and delayed flights, might be rolled back when President-elect Donald Trump takes office.
The lone dissenting vote at the FTC was cast by Andrew Ferguson, a Republican who has been tapped by Trump to take over as the agency’s chair.
In a statement, Ferguson said he voted against the rule because “the time for rulemaking by the Biden-Harris FTC is over. The Democratic majority’s four-year regulatory assault on American businesses has hindered economic growth and increased costs to the American consumer.”
Ferguson did, however, say his dissent was not based on the merits of the rule, which he acknowledged was “a significant improvement over what the Commission originally threatened to inflict on the American economy.”
FTC staff attorney Annette Soberats, who helped lead the rule-making process that drew more than 72,000 comments over two years, said she can’t speculate on what the new administration might do.
“What I can say is that we are very happy that the rule received bipartisan support and we think it reflects a very thoughtful approach that balances what we were hearing from consumers and honest competitors about these fees,” Soberats said in an interview. “My understanding from the comments that we’ve received is that both the lodging and ticket industries supported the rule so long as it applied to all players.”
Indeed, the American Hotel & Lodging Association lauded the rule.
“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 and CEO Rosanna Maietta.
And both the House and Senate have passed separate bills in recent years that would make the ban federal law. This week, as the FTC was finalizing its rule, federal lawmakers reached a deal to include a version of the pending legislation in the resolution to avoid a government shutdown. Support for that spending bill, however, remains on shaky footing.
