New FTC rule requires hotels to disclose all fees upfront
Editor's Note
On Tuesday, the Federal Trade Commission finalized a broad rule requiring various industries, including hotels, to disclose all fees in advertised prices upfront.
The final rule will prohibit hotels from excluding resort fees, also known as "junk fees," in advertised rates for short-term lodging.
In addition to hotels, the rule will also apply to vacation rentals, such as those booked through Airbnb, as well as tickets for live events like shows or sporting events.
Specifically, the rule requires businesses to display the total price most prominently when disclosing pricing information to prevent "bait-and-switch pricing tactics, such as drip pricing and misleading fees," the FTC said in a press release announcing the rule.
"Online travel agencies, hotels, and short-term rental companies like Airbnb and VRBO will have the provide consumers the full price of their stay, inclusive of all mandatory fees, upfront when the price is first shown during the consumer's search," Michael Negron, Special Assistant to the President for Economic Policy, said in a statement via email. "Those traveling to enjoy live events, such as concerts or sporting events, will also see an impact, as this rule also requires ticket sellers to show the full price of your ticket up front when comparison shopping, preventing them from imposing surprise 'service fees' or other charges at the end of the shopping process when consumers are making a payment."
The rule requires businesses to "clearly and conspicuously disclose the nature, purpose, identity, and amount of those fees before consumers consent to pay," per the FTC. "For instance, businesses that exclude shipping or taxes from the advertised price must clearly and conspicuously disclose those fees before the consumer enters their payment information."
Enforcement in other industries will be handled on a case-by-case basis, per the agency.
"The FTC's rule will put an end to junk fees around live event tickets, hotels, and vacation rentals," FTC Chair Lina M. Khan said in a statement.
The rule does not prohibit lodging groups or event operators from issuing a fee or engaging in pricing strategies.
"We all know the experience of encountering a hidden fee at the very last stage of check out—these junk fees sneak onto your bill and companies end up making you pay more because they can," President Joe Biden said in a statement via email. "Those fees add up, taking real money out of the pockets of Americans."
The rule will become effective 120 days after its publication in the Federal Register.
Enforcement, or whether the rule remains in place, will ultimately be up to the Trump administration. It may be challenged, as similar rules in the travel space have been.
In April, the U.S. Department of Transportation issued separate, airline-specific rules that would have required airlines to display the full cost of a ticket (aka the fare plus certain "essential" ancillaries) upfront.
In response, airlines sued, and a federal appeals court put the rule on hold pending a final judicial outcome. This rule is unlikely to take effect under the Trump administration.
"Airline reservations are outside of the scope of this rule, but the Department of Transportation earlier this year finalized its rule to require airline ancillary fees like checked bag or cancellation fees to be displayed up front when consumers are booking both with the airline and with online travel agent websites," said Negron. "That rule has been paused from taking effect due to ongoing litigation."
In anticipation of the FTC rule, Hilton, Hyatt, IHG and Marriott already disclose fees upfront in booking.
"IHG's channels already display all mandatory fees in the total price advertised to consumers, so IHG-branded hotels are prepared for this ruling," an IHG spokesperson said via email.
A Hilton spokesperson said: "We know consumers prioritize transparency, and in 2023, Hilton made proactive changes to our technology to further enhance the display of mandatory fees upfront on all Hilton websites and apps. We continue to advocate for the upfront display of fee-inclusive pricing across all booking platforms that sell our inventory."
Representatives from Hyatt and Marriott did not respond to a request for comment by the time of publication.
Since 2022, Airbnb has provided travelers with the option to filter results using their Total Price Display feature, which shows fees before taxes and other government fees, in search results, on the map, filter, listing page and wishlists. This includes a price breakdown inclusive of fees charged by the host, Airbnb's service fees, discounts and and taxes.
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