California adopted two bills about a year ago that made significant changes in the state’s hospitality industry. By the middle of May 2025, the United States is expected to implement a similar comprehensive law, which will affect hoteliers worldwide.
What does this mean to your hotel?
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. In May 2025, U.S. Federal Trade Commission is introducing a “Drip Pricing” or “Hotel Fee Transparency”, rule that will protect consumers from misleading pricing practices. 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. After that date, guests from the U.S. who use your booking engine must be able to see the total cost upfront. This includes the room rate and all mandatory fees, excluding taxes and government fees. The law is available online.
What impact will these measures have on the global hotel industry?
In accordance with the final rule on unfair or deceptive fees, hotels in the U.S. must display the total cost upfront when booking.
This total must include all mandatory charges (e.g. resort fees, destination fee, service charge). There is one exception: government-imposed taxes (e.g. the occupancy tax).
This law must be followed by all U.S. based hotels, including chains and independent hotels as well as management companies. The FTC may take legal action against non-compliant hoteliers or fine them for not complying.
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 to target U.S. customers or accepts bookings by U.S. residents or lists prices 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. It is applicable to hotels, similar lodgings and online travel agencies.
The FTC may have more difficulty enforcing the law if a hotel is not located in the U.S. or does not possess assets there. However, platforms which facilitate bookings, such as Expedia, Booking.com etc., are within their jurisdiction. 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 should your hotel do?
In 2024, the California law came into force and brought a new era to the hospitality industry. It was a time of greater transparency and adjustments in the sector. The new FTC rule requires hotels to audit and revamp the rates displayed and the systems that generate these rates, such as CRS and PMS. To ensure compliance, all systems must be aligned with the law.
Hoteliers should re-evaluate their pricing strategy. This includes both the room rate and any additional fees. Hotels must adapt their pricing models in order to remain competitive and increase profitability. The hotels can respond to the evolving guest expectations and industry standard by reevaluating their strategic approach.
Ensure that your internal teams, including those in sales, revenue, and marketing, are aware of the new law so that they can act quickly to differentiate your property and build trust with customers through honest, straightforward pricing.
Cendyn is committed to providing hoteliers with solutions that are future-ready and meet regulatory requirements. Cendyn CRS will be compliant with transparent rates by May 12th, 2025. This will highlight our commitment to customer satisfaction.
Refer to the Federal Register: Trade Regulation Rule on Unfair or Deceptive Fees
CENDYN
Cendyn, a cloud-based hospitality technology company, helps hotels drive revenue, maximize profits, and build deeper relationships with their guests by offering integrated solutions. Cendyn has been serving hoteliers for over 30 years. Its Find, Book, Grow Promise helps hotels achieve commercial success through their digital guest interactions.
Cendyn serves over 35,000 hotel customers in more 150 countries, generating annual revenue of more than 20 billion dollars. The company provides support to its expanding customer base in locations around the world, including the United States and France. For more information, please visit cendyn.com
