California’s Governor signed SB 478 on Saturday. It bans hidden fees, though airlines and car rentals are excluded from the ban. That leaves hotels as the major offender in the travel space which will feel the brunt of the impact – and online travel agencies which sell hotel rooms, too.
Effective July 2024 the state will ban the practice of displaying a headline price that is lower than the actual price of a product or service, and which then “discloses additional required fees in smaller print, or reveals additional unavoidable charges later in the buying process.”
- Hyatt, Marriott, and even Hilton are moving to display all-in prices on their own websites – so that resort, destination, and other scam fees (like energy surcharges – pay extra for the light bulbs) won’t make it more difficult to comparison shop hotels. But other chains like IHG and Best Western (sometimes they have resort fees too) haven’t yet followed suit.
- And online travel agency sites like Expedia and Booking.com – where people compare not just within a chain but across chains – haven’t followed suit either. California is big enough that they’re going to have to, unless they can challenge the law.
Airline pricing is strictly a federal issue under the Airline Deregulation Act. State regulation is pre-empted, so California’s rules cannot apply. The Department of Transportation has been working on new fee disclosure rules for a year but the ones they’ve proposed actually hand more power to airlines, not less.
Meanwhile car rentals are excluded from these rules, and car rentals have the scammiest fees of all. They get almost no attention. From tourism commission recovery fees; customer transportation fees; parking recovery fees; premium location charges; energy surcharges; vehicle license recovery fees; air conditioning recovery fees; and seasonal tire fees, junk fees often add 50% – 100% to the cost of a car rental.
I anticipate California’s new law to reverberate across the hotel industry, and as is often the case California to effectively regulate the nation since in most industries it doesn’t make sense to exit the California market but it often doesn’t make sense to market to California consumers differently than other consumers.
(HT: Alex G.)
@ Gary — Arkansas will opt out. 😉
Why do car rentals get a pass?
It shouldn’t be too difficult for hotels to comply – after all, they market to people in the UK looking to visit California and that marketing has, for many years, had to include all fees and taxes. Likewise, incidentally, for car rental.
Next, California should turn its attention to restaurants who add endless scammy fees at the end of the check, often raising the price by some 40% over what’s printed on the menu.
No fan of California politics, but this is a good thing.
I would add that airless and car rentals should be forced to do upfront reporting of any REQUIRED fees
Guess I’m the outlier here but frankly every major hotel chain has the option either to display the rate with all taxes and fees included or shows you a total (and you can select to view a detailed breakdown) before you commit to the reservation. This is another case of dumbing down things for the idiots that either are clueless or don’t have the initiative to research on their own. I have NEVER been surprised by a fee or tax and don’t need Nanny Government to protect me. So sad that many do.
Until other states enact this statute,I guess the thing to do is to use a VPN with a California address when booking hotels.
@AC: If you’re doing cross-brand hotel searches, no level of intelligence will spare you from having to click through to the final booking page of every hotel you might consider booking at to figure out what the price actually is.
This is what government regulation is for: When the entity making a decision can put the cost of that decision on someone else, and preventing them from doing so. Or when something works better for everyone if everyone does it, but breaks down if individual actors get better outcomes by not participating.
Anyway, there’s simply no reason to defend drip pricing.
Great news, and hope it eventually applies to all industries. It’ll be a win for these companies too, as they can now compete on a level field.
I disagree with you AC. While I also would like to think adults should be able to figure out adult things like the total cost of a hotel stay, the add on fees are outright criminal and will get worse without intervention. I do not have the time to dummy book 60 different hotels to see the “real” price.
Will hotels have one room that is bare? All the other rooms will have a room furnishings fee. If they don’t want to be so extreme then they could have a normal room, just no toilet paper, tissues (Kleenex), and towels. There would then be an optional Towel and Wipes Fee.
Or an optional utilities fee (water and electricity) along with fines if you urinate in the basin or toilet without paying the utilities fee?
The new California law really doesn’t go to the heart of the problem at all!
Yes, it is highly problematic that there is a room rate at one price and then additional fees that can dramatically push up the real price of the room to something significantly higher that might not be disclosed until later or even at the point of finalizing a reservation.
But the REAL problem are mandatory “fees” other than legitimate government-imposed taxes.
If there is something that a hotel wishes to charge that is mandatory for all guests to pay, it should be part of the room rate itself, not a mandatory extra fee! The current situation is such that the room rate means absolutely NOTHING!
For example, if a hotel wishes to charge for use of an on-site gym, fine, charge those who use the gym. (I even experienced a hotel that charged by the call for use of the telephone in the room for room-to-room calls or even room-to-front desk calls – that was years ago at the Marriott at Kendall Square in Cambridge, MA. They ultimately discontinued that scam!)
Until all mandatory fees are removed and incorporated into the price of hotel and car rentals, such new laws are effectively useless.
This is a good change but rental cars should not be excluded. All travel providers should be subject to the rule.
Wow, a Gary post mentioning California without a cheap shot at California?
What has become of View From the Right Wing?
What about taxes? The problem with having to display the full price is you lose visibility in whether some egregious local tax is driving up the price…which of course some politicians like.
Does this apply to restaurants too?
I am overly sick of insulting surcharges labeled to pay for cost-of-doing-business items such as health care for workers, which are apparently legal in the Banana Republic of the USA.
Car rentals should have been included, one step at a time. Hotels have been less than transparent with these “resort fees”, “parking fees”, etc. Good job California!