No More Hidden Hotel Fees? New FTC Rule and Legislation Target Price Transparency
A new Federal Trade Commission rule requiring transparent prices for hotels, online booking sites, and short-term rentals takes effect May 12, and Congress is moving to make portions of the rule permanent.
The House passed the Hotel Fees Transparency Act on April 28 and the Senate companion bill (S. 314) advanced out of the Senate Commerce Committee in February. The legislation and the FTC rule would require online bookers and hotels to include a total price upfront that includes charges or fees for mandatory goods or services, excluding taxes.
The legislation and the FTC final rule have the backing of online travel companies and hotel groups, and some have already begun complying: Airbnb announced in late April that it was showing the total price without taxes worldwide on the first view – no need to toggle to see the all-in cost including fees.
'Our bipartisan bill will lower costs for hotel rooms and short-term rentals by increasing transparency and banning hidden fees, and I look forward to working with my colleagues on both sides of the aisle to bring it to the Senate floor,' Sen. Amy Klobuchar (D-Minn.) said in a statement after the House bill passage.
Hotel and online booking trade groups say the legislation creates a unified national standard as more states pass their own differing laws on hotel pricing transparency. So far, California and Minnesota have passed similar hotel transparency pricing laws.
The FTC rulemaking and the federal legislation are 'complements' to each other, said Laura Chadwick, president and CEO of the Travel Technology Association, which represents the online travel sites like Booking.com and Expedia.com.
'Transparency breeds competition, we take no issue with hotels charging these fees, but we have long held it should be included in the full price,' Chadwick said.
While the FTC rule doesn't prohibit the charging of any fees, it requires certain disclosures and prohibits misrepresentations to prevent unfair or deceptive pricing practices. In addition to hotels, short-term rental, and online booking companies, it is also directed toward live-ticket sales sites too, like LiveNation and Ticketmaster.
The rulemaking process started in 2023 under the leadership of the Biden Administration's FTC Chair, Lina Khan. It was finalized last December in a 4-1 vote, with current FTC Chair Andrew Ferguson voting against it not on merit, but on the principle that he didn't support the Biden administration moving forward on rulemaking during the end of its term.
FTC rulemaking sets the standard for the states to follow, but states can set stronger transparency laws. The federal bill would set a national standard that preempts existing state laws that have hotel or other short-term rental fee disclosure requirements that conflict with those in the bill.
The American Hotel and Lodging Association, which represents more than 1,000 large hotel chains, also backs the legislation and FTC rule. Matt Carrier, AHLA's senior vice president of federal affairs, policy and research, said many of its hotel members have been doing all-in pricing for several years, but they support the rule and federal legislation because it sets a level playing field.
"Even though the FTC rule will shift the industry to all-fee inclusive pricing, what the law would then do is lock that in for the benefit of both consumers as well as businesses on what is the definition of a total price," Carrier said.
Chadwick said she's 'hopeful' for Senate floor action soon. However, a spokesperson for the Senate Majority Leader declined to comment on the timing of a Senate floor vote.
Rebecca Kern is a freelance reporter based in Washington, DC, who previously wrote about tech and energy policy at Politico and Bloomberg Government. She also briefly worked in communications for the Federal Trade Commission writing about privacy and data security actions.
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