Hotel and Airbnb “Junk Fees” Will Be More Transparent in California Starting July 1

We’ve all experienced sticker shock when booking travel at one point or another. Those days are coming to an end for our friends in the Golden State. When California’s Senate Bill 478 (SB 478) goes into effect on July 1, 2024, Californians will see transparent pricing from hotels and home-sharing platforms.

Known as the Honest Pricing Law, it will be illegal for businesses to advertise a product that doesn’t include all fees or charges, less government taxes. The law aims at hotels for deceptive resort fees and Airbnb for its cleaning fees. According to the California Attorney General, it also applies to ticket-selling platforms, restaurants, and food delivery services.¹ This follows the lead of the Biden administration cracking down on junk fees.

This is a long time coming, as consumers have been at the mercy of hotels and homestay platforms, which have built drip pricing into their platforms. Drip pricing is when only part of the total price is advertised initially, with additional charges revealed later in the booking process. To the dismay of consumers, these pricing models have been effective.²

Here’s how we got here and what you need to know going forward.

Fees Aren’t New, But Now Face Pushback

As a traveler, I’ve routinely been angry about getting “nickel-and-dimed to death.” This typically means resort, cleaning, destination, and amenity fees forced upon consumers. This practice has been going on for decades, but now consumers and legislators are finally seeing pushback.

Resort fees started in the late 1990s in Las Vegas and were sometimes sprung on travelers at check-in. The Federal Trade Commission (FTC) got involved in 2012 and warned a few dozen properties of their potentially illegal pricing models. However, not all hotels are guilty of these questionable models, as only 6% of hotels charge them. While it’s a practice of a few, it’s remarkably lucrative. A report indicated hotel properties brought in $3 billion in 2018 alone.

Since then, major hotel brands like Hyatt, Sonesta, and Marriott have all been hit with litigation around the fees. In response, Marriott and other brands have started incorporating resort fees into their pricing, but it hasn’t stopped some properties from rebranding the additional line item on traveler’s bills. A 2023 USA Today story reported a scenario where a hotel guest was charged $20 per night for a “Daily Mandatory Destination Charge.” A New York City property is charging a “curation fee.“

Hotels aren’t the only culprits, as Airbnb and other home-sharing platforms are notorious for cleaning and service fees — among other drip pricing strategies. In 2023, Airbnb CEO Brian Chesky addressed users’ concerns, saying you can “essentially” eliminate fees by using the “display total before taxes” toggle button in search.

I found this tool to be pointless as both prices are already demonstrated. Focusing on the first listing, it says $149 per night for 3 nights. This should be roughly $450 + taxes, but the price next to it shows $601 (before taxes).

When you go to the price breakdown and add in taxes, you’re met with the pricing below. Going from $447 to $601 is a 31% increase in price. Once you add taxes, it’s a 55% increase from the base price you were initially met with. And the irony is that I’ve found that most Airbnb hosts ask you to do a majority of the cleaning anyways.

Starting July 1, Airbnb’s California customers will now only see the total price before taxes.

What To Know Going Forward

This is a win for consumers based in California, and the movement is being pushed across industries. Last month, the House of Representatives passed the TICKET Act, focusing on ticket-selling platforms eliminating fees and providing price transparency to consumers. Credit card fees have also come under scrutiny, but efforts to reduce the amount from over $30 to $8 from the Consumer Financial Protection Bureau (CFPB) were temporarily blocked by a federal judge.

The overall effort to create more transparent pricing models comes from both sides of the political aisle. It’s widely agreed that more legislation against drip pricing is a win for consumers. However, no good deed goes unpunished.

Like any business, if one revenue stream is cut off, they will find a way to collect that money elsewhere. It’s plausible both hotels and Airbnb properties will likely bake the fees back into the base price, making travel look and feel pricier. But at a time when more consumers feel financially strapped, clearer pricing may help consumers feel more in control of their expenses.

Final Thoughts

The argument for this law is clearest from California Attorney General Rob Bonta: “The law is simple: the price you see is the price you pay.” I’ve argued that American pricing models have been anti-consumer for years, especially as a traveler. But the good news is that you can do something about it.

If you’re debating on staying at a hotel or Airbnb, pick the one without a laundry list of pesky fees. Or, use Costco Travel, as I did on a trip to Mexico, where the platform automatically bakes the fees into your total price. Additionally, hotel loyalty programs like Hilton Honors and World of Hyatt waive resort fees when you pay with their rewards.