Hoteliers say transparency has mostly solved the "junk fee" problem

NATIONAL REPORT — The term “junk fees” has been buzzy over the past year, and even in the past week, but hoteliers don't seem worried as they believe they are on top of the litigious issue because they are being much more transparent. They certainly don't want to discard them because the fees usually go right to the bottom line.

As extra fee practices have expanded in the consumer world, politicians have noticed and a plethora of litigation and legislation has been proposed to improve or end the practice of adding these fees, including legislation signed on Oct. 7 in California. In addition, the Biden administration proposed some new rules about it last week.

But hoteliers continually say they’ve already found a solution — transparency, and they insist the playing field must be equal with third-party booking sites required to do the same. Because of more recent practices initiated by the industry’s largest hotel brands, these fees haven’t gone away, nor will they in all likelihood. But they are now easier to see when consumers are booking rooms — instead of when they are checking out. And they say if bad actors are still not transparent in the hotel world, they are already in the minority.

On Oct. 7, California Governor Gavin Newsom signed Senate Bill 478 into law, which bans “offering a price for a good or service that does not include all mandatory fees or chargers other than taxes or fees imposed by a government on the transaction.”

The new law goes into effect on July 1, 2024. It doesn’t ban adding fees but says the final total must be disclosed upfront.

Last week, the Biden administration announced new actions to crack down on junk fees. According to their website, “the FTC is proposing a rule that, if finalized as proposed, would ban businesses from charging hidden and misleading fees and require them to show the full price upfront.”

Isaac Rodriguez

Isaac Rodriguez,  senior vice president of revenue strategy and distribution for Newport Beach, California-based Twenty Four Seven Hotels (which operates 28 hotels, about half in California), said the brands have been more proactive in standardizing the process of implementing resort fees, and the rest of the hotel world has followed suit.

“What we’ve noticed with most of the brands is you have to clearly define these fees and go through an actual process of implementing them with the brand’s permission,” Rodriguez said. “That has allowed us to be more thoughtful in the fees we have implemented.”

He said eight or nine years ago, if owners or management wanted to implement fees, they could do so with little interference. But not anymore.

Rodriguez said the fees have profoundly impacted the top-line revenue, but for independent hotels, Twenty-Four Seven Hotels has a different approach than traditional destination fees. The company calls them “value-adds.” Outside of parking, they are not blanket fees that cover everyone. Guests have the control to opt in or out of them.

“We’re very hesitant because of not having true resorts. We don’t want to create the illusion that we’re trying to add something in the name of a resort,” Rodriguez said. “Anything we add will look more like a value-add towards that customized booking experience.”

He likens their approach to what airlines do: if you just want to pay for the room or add things like Wi-Fi, F&B or a larger suite. “We don’t have blanket fees because we think we’d have a hard time clearly defining the value to everyone,” Rodriguez said.

This is going to be a challenge for those hotels that have haphazardly implemented resort fees with little education on what those fees actually pertain to. Those are the hotels that this bill is really targeted for.

Isaac Rodriguez

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He said the philosophy of being transparent with the fees comes with being forthright about the initial stages of a booking process.

“Our philosophy always begins with being transparent about these fees and ensuring we’re doing everything we can to be forthright in that first stage of the inspiration research… When they are ready to commit, they see the fee and already have that sense of the value.

“Anytime that they can see what that fee is and why it’s going to be more practical and be part of the experience it’s better. A lot of times, they can see how they should be customizing their journey.”

Rodriguez said that for his company, Marriott International has been the most proactive about ensuring hotels define their fees and are upfront with customers about them. He doesn’t anticipate any of their operations in California changing because of this bill. 

“This is going to be a challenge for those hotels that have haphazardly implemented resort fees with little education on what those fees actually pertain to,” he said. “Those are the hotels that this bill is really targeted at. And they will have to make those changes by [July 2024.]”