The United States Federal Trade Commission (FTC) has this week announced a final Junk Fees Rule. This impacts both live-event ticketing and short-term lodging, though I’ll be focused on the latter, given that this blog is about the travel industry. This bipartisan legislation was introduced back in 2022, and is now finally being implemented.
In this post:
Hotels will have to disclose mandatory fees upfront
Thanks to the Junk Fees Rule, hotels and other vacation rentals will have to display pricing that includes all mandatory fees in a timely, transparent, and truthful way, from the start of the price comparison process.
So, what exactly does the rule say? The first thing to understand is that it doesn’t prevent any business from adding fees to the cost of a short-term lodging stay, but rather it just requires clear disclosure:
The final rule targets specific and widespread unfair and deceptive pricing practices in the sale of short-term lodging, while preserving flexibility for businesses. It does not prohibit any type or amount of fee, nor does it prohibit any specific pricing strategies. Rather, it simply requires that businesses that advertise their pricing tell consumers the whole truth up-front about prices and fees.
Here’s the explanation of the new regulation:
The Junk Fees Rule requires that businesses clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display, or advertise any price of short-term lodging. Businesses cannot misrepresent any fee or charge in any offer, display, or ad for short-term lodging.
In addition, the rule requires businesses to display the total price more prominently than most other pricing information. This means that the most prominent price in an ad needs to be the all-in total price — truthful itemization and breakdowns are fine but should not overshadow what consumers want to know: the real total.
Finally, the rule requires businesses that exclude allowable fees up front to clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers consent to pay.
The FTC claims that the new Junk Fees Rule will save consumers up to 53 million hours per year of wasted time spent searching online, equivalent to more than $11 billion over the next decade.
Here’s how FTC Chair Lina M. Khan describes this development:
“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. 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. I urge enforcers to continue cracking down on these unlawful fees and encourage state and federal policymakers to build on this success with legislation that bans unfair and deceptive junk fees across the economy.”
This is a long overdue & positive change
Resort and destination fees are among the most frustrating fees in the hotel industry. The concept of hotels charging these fees has become increasingly common in recent years, and this is frustrating for consumers:
- With this practice, hotels generally bundle some amenities for a fixed nightly fee, in order to generate more revenue
- One of the primary motivations for these fees is to initially make the rate seem lower than it actually is; some hotels have a bad habit of “drip pricing,” whereby the cost of a hotel stay increases as you go through the booking process
- There are some other motivations for these kinds of fees, including online travel agencies not getting commissions on that portion of the rate, and in some areas there are tax benefits to this as well
As you’d expect, I’m a huge fan of this change in regulations — back in 2021, I wrote a post about how it’s time for hotels to be required to display all-in pricing, and I’m happy to see this finally happening.
Let’s be clear, though — these new regulations won’t require hotels to actually eliminate resort or destination fees, but rather they’ll require them to simply be more prominently displayed. But still, that’s a huge step in the right direction, and eliminates one of the primary motivations for having these fees.
Keep in mind that some of the major hotel groups have already started displaying pricing inclusive of resort fees. For example, Marriott started doing this in 2023. This followed a 2021 settlement with the Attorney General of Pennsylvania, as Marriott was facing lawsuits over its practice of not properly disclosing extra fees.
Bottom line
New legislation will require short-term lodging operators, including hotels, to clearly disclose all mandatory fees at the start of the booking process.
We’ve seen resort and destination fees spread like wildfire over the years, and one major motivation has been that hotels have been able to display low prices upfront, and then tack on extra fees as the booking process goes on.
I’m thrilled to see this new regulation being implemented, and I don’t think any reasonable person (well, outside of a paid industry lobbyist) would argue that this isn’t in the best interest of consumers. To be clear, this doesn’t mean these fees are going anywhere, but at least we’ll know the details at the beginning, and it does eliminate one of the incentives that hotels have to charge these fees.
What do you make of this new ban on hidden junk fees?
"Keep in mind that some of the major hotel groups have already started displaying pricing inclusive of resort fees. For example, Marriott started doing this in 2023. This followed a 2021 settlement with the Attorney General of Pennsylvania, as Marriott was facing lawsuits over its practice of not properly disclosing extra fees."
Actually, Marriott is not complying with its settlement when searching hotels on award (points) stays.
They're gonna reverse this shit after the rich people tax cuts.
Yaaay, finally... :-)
Taxes are another thing. The first price you see excludes taxes, which get added later. Book that same US hotel from a european comparison site and you see the taxes in the initial quote. Much more transparent.
it says mandatory fee. Can they take a page from Spirit/Frontier book and state that resort fees are not mandatory and can be removed by simply stopping by resort fee desk which is open every weekday from 3:00 to 3:15 am?
This is also likely to stay with the incoming administration, as the new FTC head is on record saying he doesn't disagree with this.
Another win from the Biden administration. It’s such a shame they weren’t able to turn all of these accomplishments into an election victory. So many good technocratic things over the last 4 years.
That's what happens when "you" take a corpse who can't string together 2 sentences past 4pm, prop him up Weekend@Bernie's style, lie about it for years on end, publicly debase anyone who objects; and then when it all inevitably falls apart, confirming the suspicions that people have had all along: you use "vote for us or you hate women and democracy!" as your sole sales pitch.
And I say that as someone who frigging HATES Trump.
Anybody who thinks Biden was incoherent was either watching cherry-picked MSM soundbytes or is just a MAGAt trying to distract from how completely awful their own man is. Sure, Trump was verbose, but unlike Biden, he never SAID anything. The past four years have been a case study in information environments having more impact on voters' perceptions of the country than their own lived experience.
And I'm not talking about Fox, all the ostensibly...
Anybody who thinks Biden was incoherent was either watching cherry-picked MSM soundbytes or is just a MAGAt trying to distract from how completely awful their own man is. Sure, Trump was verbose, but unlike Biden, he never SAID anything. The past four years have been a case study in information environments having more impact on voters' perceptions of the country than their own lived experience.
And I'm not talking about Fox, all the ostensibly "left" outlets like CNN, WaPo, NBC, NYT, the list goes on never stopped talking about Biden gaffs, never mentioned his admin's successes (soft-landing post-COVID, enormous investment in US-based manufacturing and infrastructure, blue-collar wage increases outpacing inflation, bringing inflation back down, additional consumer protections like this article, etc etc), and the whole time put everything Trump said through a sanity filter to make it seem like he actually had policies instead of incoherent rants.
What voters have done, specifically Trump voters, is ensure that the next Afghanistan never actually ends, and that the next time we have a market-shattering event like COVID or the '08 recession, politicians will let unemployment go through the roof rather than have 3% inflation.
"New legislation will require short-term lodging operators, including hotels, to clearly disclose all mandatory fees at the start of the booking process."
Technically it's new *regulations* as this wasn't specifically passed by the legislature but rather promulgated pursuant to FTC's existing authorities :)
Let's have a companion piece for this: a how-to guide for consumers who encounter violations of the new rules. It'll be awhile before we see ubiquitous compliance.
I don't see this as a win. More disclosure? Great. Grandma can now see that a Vegas hotel has a $49/night resort fee and that a Scottsdale resort has a $35/night destination fee before booking.
The larger issue that won't be fixed is hotels, restaurants and even contractors adding extra fees for their own benefit. Resort fees, destination fees, wellness fees, employee Healthcare fees, credit card processing fees and all others should just be...
I don't see this as a win. More disclosure? Great. Grandma can now see that a Vegas hotel has a $49/night resort fee and that a Scottsdale resort has a $35/night destination fee before booking.
The larger issue that won't be fixed is hotels, restaurants and even contractors adding extra fees for their own benefit. Resort fees, destination fees, wellness fees, employee Healthcare fees, credit card processing fees and all others should just be included in the total. Stop calling it a fee. Haven't companies figured out that consumers dislike the word "fee"?
This ruling does exactly what you're complaining about... all fees must be included in the upfront total price that consumers see at the very beginning of the process. So hotels can tack on as many fees as they want, but it will just inflate the price consumers see first.
I concur. It's bonkers that they don't just charge you for the price of stay and amenities of the hotel. Separating that cost out and calling it a "fee" adds ick and no one likes that.
Except that as @Super mentioned, you see the full price with all those junk fees included up-front. Tacking on additional junk fees only makes your price appear higher in that initial search, IE it's no longer a hidden gotcha when you click on a $49/night rate from the search and then you see grand total of $110 with resort fee and taxes at checkout.
I'm curious to see whether certain brands that don't cover resort fees on award stays can continue to call them free nights under this regulation. That includes Bonvoy but esp ones like MGM and Caesars that love to give out "comp nights" (as long as you pay the $40 nightly fee).
We get comp nights at the Peppermill in Reno. In the flyers mailed to us showing our "free" nights, they now are showing them as $45 nights, which is their resort fee. So it appears that the fees need to be disclosed even for "free" nights, based on my sample-size of one.
Are you in California? That regulation came into effect earlier and might more specific language
This is why regulation can be a GOOD thing.
So, when?
And, yes, I love it that you’re showing the Andaz Maui for the junk fees article.
FTC gives 120 days from publication to comply, so around mid-April 2025