FTC Publishes New Rules on Surprise Fees When Booking Hotels and Vacation Rentals

Today, the Federal Trade Commission (FTC) announced that it’s finalized new “junk fee” rules for short-term accommodation (hotels and vacation rentals) and live event tickets. The agency claims these rules are meant to “prohibit bait-and-switch pricing and other tactics” these companies use to hide the total price of lodging or tickets.

In the case of hotels, this includes things like resort fees and service fees that aren’t included in the advertised room rate. Instead, they’re often added during the booking process. This can make it hard to comparison shop between hotels since these fees aren’t included in the price shown on most comparison websites.

The FTC claims its new rules will create more transparent pricing for consumers when booking a hotel room or buying an event ticket. Here’s a closer look at these new rules and how they might change hotel room pricing.

New FTC Rules For Hotel Pricing

The FTC’s new junk fee rules for short-term accommodation providers and ticket sellers are relatively straightforward. First, the agency won’t prohibit adding fees to the cost of a hotel room. Instead, it will require businesses to provide consumers an up-front price inclusive of all fees.

Specifically, the FTC’s new rules state that businesses must include all mandatory fees whenever they offer rooms for rent or tickets for sale. In theory, this should mean that ads and online travel agencies will show an all-in price instead of just a room rate that doesn’t include extra fees charged by the hotel, like resort fees.

Businesses will also be required to display the all-in price more prominently than other pricing information. Further, businesses excluding allowable fees upfront will be required to clearly show the purpose and amount of each fee before consumers pay.

That said, it’s unclear what the FTC will do to enforce these new rules. Further, many of the rules aren’t entirely new. For example, in 2012 the FTC sent letters to 22 hotels warning them that they must clearly state resort fees. And while this resulted in more hotels disclosing these fees, it never brought upfront pricing.

Final Thoughts

It’s great to see the FTC publish pro-consumer rules around hotel and live event ticket pricing. It’s not uncommon to book a hotel in places like Las Vegas and be charged a resort fee that’s higher than your room rate. This makes it hard to comparison shop through online travel agencies, because the price listed in search results often doesn’t include these extra fees.

Further, hotels are encouraged to use these fees instead of raising room rates outright. This is because the hotels that exclude these fees look less expensive on comparison sites while hotels that add them look more expensive. In turn, this effectively hurts honest hotels as they look more expensive than the competition.

Of course, we’re still unsure of how the FTC will enforce these new rules. But in an ideal world, these rules will eventually lead to a place where we know exactly how much we’re paying for a hotel room or a concert ticket before we’re on the booking screen.