The U.S. 'Drip Pricing' Law: What It Means to the Global Hotel Industry
What does this mean for your hotel? Transparency in hotel pricing will no longer be best practice — it will become the law when advertising and accepting reservations from U.S.-based consumers. On May 12, 2025, the U.S. Federal Trade Commission will institute a new 'Drip Pricing,' or 'Hotel Fee Transparency' rule to protect consumers from deceptive pricing practices. This law will prevent hoteliers from displaying a lower price when a guest initially purchases a room online and then adding additional fees at checkout, which is considered misleading and detrimental to consumers' trust.
After the law goes into effect on May 12, 2025, any guest browsing your booking engine from the U.S. must see the total price upfront, including room rates and all mandatory fees (excluding government taxes and fees). Read the law.
How will these measures affect global hoteliers?
The final trade regulation rule, 'Rule on Unfair or Deceptive Fees,' mandates that hotels display the total price upfront during the booking process for consumers based in the U.S.
This total price must encompass the room rate and all mandatory fees (e.g., resort fees, destination fees, service charges). The only exception is that government-imposed taxes and fees (e.g., occupancy tax) can still be displayed separately.
All U.S.-based hoteliers must comply with this law, including chains, independent hotels, management companies, and any booking engine, OTA, or metasearch displaying prices to U.S. customers. Non-compliance could result in legal action or fines from the FTC.
FTC Rule 16 CFR Part 464 — also known as the 'Hotel Fee Transparency Rule' — primarily applies to entities doing business in the United States or targeting U.S. consumers, regardless of their physical location. A hotel falls under the jurisdiction of the FTC for non-U.S. businesses if they market to U.S. consumers and their practices affect commerce in the United States.
If a non-U.S.-based hotel operates a website or uses third-party platforms targeting U.S. customers, accepts bookings from U.S. residents, or lists prices in U.S. dollars for U.S. consumers, the hotel will likely be subject to the rule.
This rule ensures that the total price (including mandatory fees) is clearly disclosed upfront in hotel bookings. It applies to hotels and similar lodgings, online travel agencies (OTAs), and booking platforms.
While enforcement may be more challenging for the FTC if the hotel lacks a U.S. presence or assets, platforms that facilitate bookings (like Expedia, Booking.com, etc.) are certainly within the reach of U.S. jurisdiction. For questions regarding this law's applicability to your business, please consult with a lawyer or expert.
What steps should your hotel take?
The implementation of the California law, which came into effect in 2024, ushered in a new era of transparency and operational adjustments for the hospitality sector. The new FTC rule will require hotels to revamp and audit the displayed rates and the systems from which those rates are generated, such as your CRS or PMS. All systems must align with the law to ensure compliance.
Hoteliers must reevaluate their pricing strategy, including room rates and additional fees. With the requirement to integrate all hotel charges into the advertised room rate, hotels must adjust their pricing models to stay competitive in the market while also enhancing profitability. This strategic reevaluation enables hotels to respond to changing guest expectations and industry standards, ultimately improving their market position and revenue potential.
Finally, ensure that internal revenue, sales, and marketing teams are aware of this new law. They can react quickly and use this opportunity to build trust with guests while differentiating your property through straightforward, honest pricing.
We're here to help!
At Cendyn, we're dedicated to empowering hoteliers with future-ready solutions that meet regulatory requirements. Cendyn CRS and Booking Engine will comply with transparent room rate displays by May 12, 2025, highlighting our commitment to customer satisfaction and adaptability.
ABOUT CENDYN
Cendyn is a global hospitality cloud-based technology company that enables hotels to drive revenue, maximize profitability, and create deeper connections with guests through its integrated solutions. Serving hoteliers for nearly 30 years, Cendyn drives commercial success for hotels through its Find, Book, Grow promise: find the right guests, drive them to book direct, and grow loyalty and revenue across the spectrum of digital guest interactions.
Cendyn has over 35,000 customers worldwide in more than 150 countries generating more than $20 billion in annual hotel revenue. The company supports its growing customer base from locations across the globe, including the United States, France, the United Kingdom, Singapore, Bangkok, and India. To find out more, visit cendyn.com
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