All California hotels must disclose surprise junk fees starting July 1, thanks to two new state laws, including one specifically targeting hotel resorts and cleaning fees.
The California State Legislature recently passed Senate Bill 478 to modify California’s Consumer Legal Remedies Act. The bill requires issuers to disclose all additional fees beyond the service itself upfront. Also known as “surprise fees,” hotel, cruise, and airline junk fees are often not listed until checkout. These charges will usually only appear with a bill’s final total, along with other taxes and fees.
Many major hotel chains, including Marriott, Hilton, Hyatt, and Choice Hotels, already openly disclose resort destination fees when you book, largely in response to consumer state lawsuits and pressure from the White House. In 2021, for example, Marriott settled with the Pennsylvania attorney general and agreed to start showing resort fees in future bookings. This move encouraged major hotel chains in the U.S. to follow suit.
Senate Bill 478 would “make unlawful advertising, displaying, or offering a price for a good or service that does not include all mandatory fees or charges other than taxes or fees imposed by a government on the transaction, as specified,” per the bill.
Key Points of Senate Bill 478
- Unlawful Advertising:
- Prohibits displaying prices that exclude mandatory fees.
- Applies to hotels, food delivery services, and event tickets.
- Forces cruise lines to be transparent about hidden costs upfront.
- Impact on Businesses:
- Aims to eliminate deceptive fees.
- Ensures upfront knowledge of total costs.
- Penalizes companies using hidden fees.
- Consumer Protection:
- Prevents unexpected charges at checkout.
- Allows consumers to compare true total costs.
- Facilitates better price transparency on comparison sites and apps.
“Today, California is eliminating hidden fees. These deceptive fees prevent us from knowing how much we will be charged at the outset,” said California Attorney General Rob Bonta in a statement on Oct. 7, 2023. “… because a growing list of websites, apps, and brick-and-mortar businesses are using them, they penalize companies that are upfront and transparent with their prices. The price Californians see will be the price they pay.”
Assembly Bill 537: Targeting Hidden Resort Fees
Last year, Governor Gavin Newsom also signed Assembly Bill 537 into law. The bill specifically targets hidden resort cleaning and service fees and will also go into effect on July 1. This bill mandates that hotels must disclose resort fees and any other added costs alongside room rates.
Key Points of Assembly Bill 537
- Fee Disclosure:
- Requires upfront disclosure of resort fees.
- Applies to room rates and additional costs.
- Aims to improve price transparency.
- Previous Legislation:
- Builds on earlier attempts to mandate full cost disclosure.
- Extends to hotels, short-term rentals, and third-party booking services.
- Seeks to standardize price presentation.
This legislation also applies to Airbnb bookings, where users must toggle a switch to show nightly rates, including all fees. In California, this legislation should eliminate that function.
Industry Reactions and Expectations
Representatives from Hyatt, Hilton, and Airbnb did not respond to a request for comment at the time of publication, but industry experts do not expect this legislation to increase hotel rates.
“The new rule should make it easier for consumers to compare the true total cost of their stay, factoring in the base rate, taxes, and mandatory fees, between various hotels,” said Henry Harteveldt, Founder of Atmosphere Research, a travel industry analytical firm. “This should be especially helpful on price comparison sites and online travel agency sites and apps, where today a hotel that has a lower rate – but a high resort or destination fee – may appear first.”
Broader Legislative Context
On a broader level, the Biden administration has been particularly interested in eliminating junk fees, along with hotel, resort, and airline fees, and has targeted their removal in national legislation. In April, the U.S. Department of Transportation finalized a rule requiring airlines to display the full flight cost, including bag and seat assignment fees, to flyers upfront. Carriers have until late April 2025 to implement the change, though many airlines are suing to combat the “arbitrary” legislation.
Final Thoughts
The introduction of Senate Bill 478 and Assembly Bill 537 marks a significant step towards enhancing price transparency for consumers in California. By requiring upfront disclosure of all fees, these laws aim to prevent unexpected charges and promote fair competition among businesses.
