California adopted two bills about a year ago that made significant changes in the hotel industry. By the middle of May 2025, the United States is expected to implement a comprehensive law affecting hoteliers worldwide.
What does this mean to your hotel or resort? Transparency in hotel pricing will no longer be best practice — it will become the law when advertising and accepting reservations from U.S.-based consumers. The U.S. Federal Trade Commission (FTC) will introduce a new rule on May 12, 2025 to protect consumers against deceptive pricing. This law prohibits hoteliers displaying a cheaper price when guests initially purchase a room on the internet and adding additional fees during checkout.
The law will take effect on May 12, 2020. Any guest searching your booking engine in the U.S. should see the full price, including the room rate and all mandatory fees. Read the law.
How will the global hotel industry be affected by these measures?
In accordance with the final rule on unfair or deceptive fees, hotels in the U.S. must display the total cost upfront when booking.
The total price must include the room rate as well as all mandatory fees. Only taxes and other fees imposed by the government (e.g. occupancy tax) may be shown separately.
All U.S. hoteliers are required to comply with the law. This includes chains, independent hotels and management companies. It also applies to any booking engine, OTA or metasearch that displays prices for U.S. consumers. FTC fines or legal action could be taken if you do not comply.
FTC Rule 16 CFR Part 464 — also known as the “Hotel Fee Transparency Rule” — primarily applies to entities doing business in the United States or targeting U.S. consumers, regardless of their physical location. The FTC has jurisdiction over hotels that are not U.S.-based businesses, if their marketing practices impact commerce in the United States and they target U.S. consumers.
A hotel that is not based in the United States but operates a website, uses third-party platforms, accepts reservations from U.S. residents or lists its prices in U.S. Dollars for U.S. consumer, will be likely subject to this rule.
The total cost (including mandatory fees), including the booking fee, must be clearly stated upfront. This rule applies to online travel agencies, booking platforms and hotels as well as similar lodgings.
The FTC may have more difficulty enforcing the law if the hotel is not located in the U.S. or has no assets there. However, booking platforms like Expedia and Booking.com can be used to facilitate bookings. The United States has jurisdiction over these issues. If you have any questions about the law and its applicability for your business, consult a lawyer or an expert.
What actions should your hotel take to ensure its success?
California’s law went into effect in 2024 and brought about a new age of transparency in the hospitality industry. The new FTC rule requires hotels to overhaul and audit their displayed rates, as well as the systems which generate those rates. This includes your CRS and PMS. For compliance, it is important that all systems are aligned to the law.
Hoteliers need to re-evaluate their pricing strategies, including the room rates and any additional fees. In order to maintain their competitiveness in the market and improve profitability, hotels will need to adjust their pricing model to include all hotel fees into the room rate. The strategic reevaluation allows hotels to adapt to the changing expectations of guests and industry standards. This will ultimately improve their market position and potential revenue.
Last, let your revenue, sales and marketing teams know about this new law. They can use this to build trust and differentiate their property with guests by using straightforward, honest pricing.
We’re ready to help!
Cendyn is committed to providing hoteliers with solutions that are future-ready and meet all regulatory requirements. Cendyn CRS The following are some examples of how to get started: Booking Engine By May 12, 2025 we will be displaying transparent rates for our rooms, showing that we are committed to providing a high level of customer service and flexibility.
Chethan Salian Director of Product Management. Chethan is on Twitter. LinkedIn.
Cendyn
Cendyn The company is a cloud-based global hospitality technology provider that helps hotels increase revenue, maximize profit, and develop deeper connections with their guests by offering integrated solutions.
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