What California’s Hotel and Rental ‘Junk Fees’ Mean For You
Last May, Samir Bhavnani, a 47-year-old tech executive from San Diego, was planning a trip to Palm Springs, Calif., where he planned to propose to his girlfriend. He found the perfect spot on Vrbo: It offered a “spa in a grotto,” a slide and a swim-up bar and had plenty of five-star reviews.
He decided to book two nights, at $595 a night. But somehow, the total came to about $2,300.
“And $595 plus $595 doesn’t equal $2,300,” Mr. Bhavnani said. “Taxes, host fees and service fees basically doubled the price. I asked the owner what the fee breakout was, and they said it was $300 for cleaning and $300 for ‘air-conditioning.’ This is Palm Springs. I expect every place to have air-conditioning like they have running water.”
Soon, if you’re booking a place to stay in California — whether you live in the state or not — this kind of sticker shock from hidden, or “junk,” fees will be far less likely to spoil your trip.
On July 1, a sweeping new state law will ban hidden fees on purchases — including event tickets, hotel rooms and food delivery services — by requiring businesses to include all mandatory fees or last-minute charges in their advertised and displayed price.
In short, “the price Californians see will be the price they pay,” Rob Bonta, the state’s attorney general, said in a statement in October, when Gov. Gavin Newsom signed the bill.
A second law, also taking effect July 1, specifically targets the sometimes hefty hidden resort and cleaning fees at hotels.
“Earlier this year I was charged a destination fee at a hotel,” Marc Berman, the California state assemblyman who wrote the second bill, said in a statement. “It’s a hotel. Being a destination isn’t a special add-on; it’s literally the essence of a hotel.”
Mr. Bhavnani spent his proposal getaway at a hotel that cost about $600 a night, which included a $25 nightly resort fee. Despite the change in plans — and even though he forgot the ring and had to propose with “a big, gaudy fake” one that he picked up at a T.J. Maxx — she still said yes.
Here are a few things to know about how California’s new junk fee law will affect hotels and short-term rentals.
What does this mean if you’re booking a hotel room?
Some hotels are still trying to figure that out, said A.J. Rossitto, the advocacy director at the California Hotel and Lodging Association.
But all resort fees, destination fees and facility fees — either the ones that appear on the list of charges just before you confirm your booking, or the “mandatory” ones a hotel desk clerk might add to your bill at checkout — will have to be included in the initial price you see while you’re shopping around for options.
Some hotel chains, like Choice, Hilton and Marriott, have already begun displaying all mandatory fees in their upfront prices for listings across the country, according to spokesmen from the three companies.
InterContinental, which operates brands including Kimpton, Crowne Plaza and Staybridge Suites, among others, has begun modifying its system so that room rates include all amenity and other mandatory fees, according to Jamie Cwalinski, a spokesman for the company. The fee-inclusive displays will be visible on all U.S. listings in coming weeks, he said.
Which fees must hotels list?
It all boils down to one question, said Mr. Rossitto: Is this fee mandatory? If a service is optional, it will not be included. But a mandatory fee within an optional service would have to be, he explained.
“For example,” he said, “if you purchase a massage and there’s a mandatory 10 percent gratuity, that 10 percent gratuity is going to be included in the listed massage price.”
How about short-term rentals?
Cleaning fee, service fee, host fee: These types of mandatory charges often appear in a list just before you finish booking on a short-term rental site like Airbnb or Vrbo.
Airbnb, for one, has installed a button on its website that allows all properties that appear in your initial search to display their prices as “total before taxes.” For listings in California after July 1, travelers will always see these as part of the advertised price instead of at the end of the reservation process.
For those booking outside the state, if you turn this feature on, the results will include all mandatory fees in the displayed price.
Currently, Vrbo lists two prices in its initial search results: First, the nightly rate without fees is shown in bold. Then, just below the nightly rate, the total price of the entire stay is displayed, which includes all mandatory fees.
Will other states follow suit?
Several other states have considered legislation targeting junk fees. Minnesota recently passed its own junk fee law, which will go into effect next year. The California laws, the first in the U.S. to go into effect, come as the federal government weighs a crackdown.
In October, President Biden announced an effort to rein in junk fees — which, according to the statement, cost Americans tens of billions of dollars each year. In November, the Federal Trade Commission proposed a ruling that would prohibit businesses across the country from misrepresenting the total costs of goods and services by omitting mandatory fees from advertised prices. Last April, the Federal Trade Commission held an informal hearing that was open to the public to hear comments on its proposed rule, which it will use to decide on how it moves forward with its proposal.
Will all this make prices go up?
It shouldn’t, though starting in July, it could make them appear to, as hotels and short-term rentals include mandatory fees in their advertised prices.
The shift could even lower some costs.
Pam Knudsen, who specializes in short-term-rental regulation at Avalara, a maker of tax compliance software, said that the short-term-rental hosts and property managers may start re-evaluating what kinds of fees they are charging and decide to cut some fees to remain competitive.
“It’s really going to depend,” Ms. Knudsen said, “on how they want to look compared to the other people that are listing on that same platform and in that same area.”
