Last May, Samir Bhavnani, a 47-year-old tech executive from San Diego, planned a trip to Palm Springs, Calif., where he planned to propose to his girlfriend. He found the perfect place on Vrbo, with a “cave spa,” slides, a poolside bar and plenty of five-star reviews.
He decided to book two nights for $595 a night, but somehow the total price came to about $2,300.
“$595 + $595 is not $2,300,” Bhavnani said. “Taxes, host fees, and service fees essentially double the price. I asked the owner what the fees were, and he said it was $300 for cleaning and $300 for 'air conditioning.' This is Palm Springs, every property should have air conditioning, just like they have running water.”
Soon, if you're booking a lodging in California, whether you live in the state or not, you'll be much less likely to have your trip ruined by inflated hidden, or “junk,” fees.
On July 1, a sweeping new state law will ban hidden fees on purchases like event tickets, hotel rooms and food delivery services and require businesses to include all mandatory or last-minute fees in their advertised and listed prices.
In short, “the price Californians see is the price they will pay,” the state's Attorney General, Rob Bonta, said in an October statement after Gov. Gavin Newsom signed the bill.
The second law, which also goes into effect July 1, specifically targets hidden resort and cleaning fees that are sometimes expensive at hotels.
“Earlier this year, I was charged a destination fee at a hotel,” California Assemblyman Marc Berman, who authored 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 what a hotel is.”
On the proposal trip, Bhavnani stayed in hotels that cost about $600 per night, which included a $25 per night resort fee. Despite a change of plans, and even though he forgot the ring and had to propose with a “gaudy fake one” he bought at TJ Maxx, she still said yes.
Here's some things you need to know about how California's new junk fee law affects hotels and short-term rentals.
What does this mean if you are booking a hotel room?
Some hotels are still figuring out how to do that, said AJ Rossitt, advocacy director for the California Hotel & Lodging Association.
But resort fees, destination fees and facility fees (the ones that appear on the price list just before you confirm your reservation, or the “mandatory” fees that hotel front desk clerks add to your bill when you check out) should all be included in the initial price you see when you're weighing your options.
Some hotel chains, including Choice, Hilton and Marriott, have already begun displaying all mandatory fees in the initial rates on their national hotel booking sites, spokespeople for the three companies said.
InterContinental, which operates brands such as Kimpton, Crowne Plaza and Staybridge Suites, has begun changing its system to include all amenity fees and other mandatory charges in the room rate, said spokeswoman Jamie Kwalinski. The fee-inclusive designation will begin appearing on all U.S. listings in the coming weeks, she said.
What rates should hotels list?
Rossitt said it all comes down to the question of whether the fee is mandatory. If the service is optional, there is no fee included. But mandatory fees must be included within an optional service, he explained.
“For example, if you purchase a massage and a 10 percent tip is required, that 10 percent tip is included in the price of the massage,” he said.
How about short-term rental?
Cleaning fees, service fees, and host fees: These mandatory fees often appear on listings just before you complete a booking on short-term rental sites like Airbnb and Vrbo.
For example, Airbnb has added a button to its website that allows travelers to view the price of all accommodations shown in the initial search as a “total price excluding taxes.” For accommodations in California after July 1, travelers will always see this price as part of the advertised price, rather than at the end of the booking process.
If you're booking out of state, turning this feature on will include all mandatory fees in the price you see in the results.
Currently, Vrbo displays two prices in the initial search results: first, the nightly rate without fees, which is displayed in bold, and then just below the nightly rate, the total price for your entire stay, including all mandatory fees.
Will other states follow suit?
Several other states are also considering bills targeting junk fees. Minnesota recently passed its own junk fee bill, which goes into effect next year. California's law, the first in the U.S., comes as the federal government considers a crackdown.
President Biden announced in October that he would work to curb junk charges, which he said cost Americans tens of billions of dollars each year. In November, the Federal Trade Commission proposed rules that would prohibit companies nationwide from misrepresenting the total cost of goods and services by omitting mandatory fees from advertised prices. The FTC held informal hearings open to the public last April to hear comments on the proposed rules, which it plans to use to decide how to move forward with the proposal.
Will all this increase prices?
That shouldn't be the case, but from July it may seem that way as mandatory fees will be included in the advertised prices of hotels and short-term rental properties.
The move could also result in some cost savings.
Pam Knudsen, who specializes in short-term rental regulation at tax compliance software maker Avalara, said short-term rental hosts and property managers may reassess what fees they charge and decide to lower some fees to stay competitive.
“It really depends on how you want to appear compared to others who are listing in the same area on the same platform,” Knudsen said.
