Travelers will soon no longer have to worry about paying the hidden fees that ultimately increase their final bill when checking out of accommodations.
The U.S. Federal Trade Commission on Tuesday adopted a final Junk Fees Rule to ban “unfair and deceptive pricing practices” that hide aggregate prices for various industries, including short-term lodging. It doesn’t prohibit companies from charging these fees, but ensures they show the total costs up front.
“People deserve to know in advance what they’ll be asked to pay — without having to worry about being hit later with mysterious fees that they didn’t budget for and can’t avoid,” said FTC Chair Lina M. Khan. in a statement: “The FTC’s rule will put an end to junk fees surrounding live event tickets, hotels and vacation rentals, saving Americans billions of dollars and millions of hours of wasted time.”
The FTC predicts that the new rule could save consumers up to $11 billion over the next decade, along with 53 million hours per year that would otherwise be spent uncovering true total costs.
The Biden administration began cracking down on hidden junk fees in 2022, which President Joe Biden said was “hitting marginalized Americans the hardest.”
Here’s what you need to know about the latest Junk Fees rule.
Payments for flight cancellations? DOT is considering a new rule.
Hotel-casinos on the Las Vegas Strip on October 14, 2024 in Las Vegas, Nevada.
What does the new FTC rule mean for travelers?
Unfortunately, travelers have been suffering from hidden costs for years. A 2023 NerdWallet analysis of more than 100 hotels found that the average resort fee was $38.82, accounting for about 3.9% of the nightly rate. However, in some cases these costs exceeded 30% of the nightly cost.
“Properties are doing this to artificially lower their online rates, so others should follow suit because online travel shopping is highly rate-driven,” David Sherwyn, a professor of hospitality human resources and law at Cornell University, said in a statement.
Under the new Junk Fees Rule, all short-term rentals and hotels must “clearly and conspicuously disclose the actual total price, including all mandatory fees, when offering, displaying or advertising a price” and must not “misrepresent any fee or surcharge” when advertising consumers.
Also, the actual total price should be displayed more prominently than other price information. Price breakdowns are permitted but must not overshadow actual costs.
The last part of the new rule requires companies to “disclose the nature, purpose, identity and amount of those fees before consumers agree to pay,” such as resort fees, Wi-Fi fees or other taxes.
Sherwyn added that hotels will likely find other ways to account for the revenue these fees generate: “However, this raises a number of questions that hotels will have to answer, for example the fact that the resort fee, and not the room rate, is the increases revenue. if there is more than one person in the room, will hotels increase rates and let individual guests subsidize the room with multiple guests, or will they charge for extra people in the room?
Some industry players, such as the American Hotel & Lodging Association (AHLA), are applauding the new rule for establishing a national standard for the lodging industry. “For years, AHLA has led the way in establishing a single, federal standard for displaying lodging costs across the industry because consumers deserve transparency no matter where or how they book their stay,” said Rosanna Maietta, president and CEO of AHLA . recent press release.
This article originally appeared on USA TODAY: What to know about the new ban on ‘hidden fees’ in hotels
