FTC Cracks Down on Hidden Fees: What Travelers Need to Know
A new rule from the U.S. Federal Trade Commission (FTC) promises to make travel bookings more transparent by banning deceptive pricing practices that hide mandatory fees. Here’s what this means for travelers and how it will impact the lodging industry.
What Does the FTC Rule Address?
The FTC’s new Junk Fees Rule, finalized on Tuesday, requires hotels and short-term rentals to disclose all mandatory fees upfront. While businesses can still charge these fees, they must clearly include them in the total advertised price.
“People deserve to know upfront what they’re being asked to pay—without worrying that they’ll later be saddled with mysterious fees,” said FTC Chair Lina M. Khan.
The rule aims to protect consumers from hidden costs that inflate the final bill, a common frustration for travelers.
How Will This Change Benefit Travelers?
For years, hidden fees have added significant costs to hotel stays. A 2023 NerdWallet analysis revealed that the average resort fee was $38.82 per night, sometimes accounting for over 30% of the nightly rate. These fees often go unnoticed until check-out, frustrating travelers.
Under the new rule:
- Total Price Disclosure: Hotels and rentals must prominently display the true total price, inclusive of all mandatory fees, taxes, and charges.
- Transparent Fee Breakdown: Businesses can still show detailed pricing breakdowns, but the total cost must be more prominent.
- Clear Fee Purpose: Hotels must explain what mandatory fees cover, such as resort access, Wi-Fi, or parking, before guests agree to pay.
The FTC estimates this move will save consumers up to $11 billion over the next decade and reduce wasted time by 53 million hours annually.
What Does This Mean for the Industry?
While the rule is a win for consumers, it presents challenges for hotels and rentals accustomed to using hidden fees to make their nightly rates appear more competitive online.
David Sherwyn, a hospitality professor at Cornell University, notes that these fees often drive revenue, especially in rooms with multiple occupants. “Hotels may have to adjust by raising room rates or charging for extra guests,” Sherwyn said.
However, some in the industry welcome the change. The American Hotel & Lodging Association (AHLA) has supported a federal standard for fee transparency. “Consumers deserve to have clarity, no matter where or how they book their stays,” said AHLA President Rosanna Maietta.
What’s Next?
The new rule is expected to take effect following a public comment period and potential legal challenges. For travelers, it signals a shift toward more honest pricing in the lodging industry.
Whether you’re booking a hotel or a vacation rental, the days of unexpected charges at check-out may soon be a thing of the past, making planning your next trip that much easier.
This push for transparency is part of a broader effort by the Biden administration to eliminate so-called junk fees, which disproportionately affect marginalized communities. As travel becomes more straightforward, travelers can focus on enjoying their experiences instead of deciphering hidden costs.
