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California Cracks Down on Hotel Junk Fees

For immediate release:

SACRAMENTO – Governor Gavin Newsom has signed legislation requiring that mandatory hotel and resort fees be disclosed in the advertised, offered, and displayed room rates. Authored by Assemblymember Marc Berman (D-Menlo Park), the new law will crack down on hidden fees in the hotel industry – what President Biden termed “junk fees.” AB 537 builds upon SB 478 (Dodd), which was recently signed into law by the Governor and sets a baseline under California’s Consumer Legal Remedies Act for advertising numerous consumer goods and services.

“Californians are fed up with surprise hotel charges, like cleaning or resort fees, that are both dishonest and misleading,” said Assemblymember Berman. “We’ve all had the experience of going to a hotel website, entering the dates of your stay, picking a room for a certain price, entering your personal information, and then at the very last step the hotel or travel website tacks on resort or cleaning fees. Earlier this year I was charged a destination fee at a hotel. It's a hotel. Being a destination isn’t a special add-on, it’s literally the essence of a hotel. Enough is enough. AB 537 will ensure that the advertised cost of your hotel stay is the real price you pay.”

“Reports show that U.S. hotels generate billions of dollars from mandatory hotel fees,” Berman added. “President Biden has made it clear: hidden fees, charges, and add-ons designed either to confuse or deceive consumers are unacceptable. Thank you to Governor Newsom for signing this important consumer protection legislation.”

“Internet lodging reservations should be honest and straightforward rather than a bait and switch trap door of price manipulation,” said Senator Steve Glazer, D-Contra Costa. “This legislation will ensure fair dealings for the traveling public.”

Senator Glazer authored a similar bill, SB 683, which would have required all lodging services, including hotels, short-term rentals, and third party booking services, to display the total cost of the stay including all extra fees, rather than just the “nightly” cost.

"The Consumer Federation of California is proud to sponsor AB 537 and thank Assemblymember Berman for taking the lead on this basic pocketbook issue," said Robert Herrell, Executive Director of the Consumer Federation of California. "Resort fees are becoming more common, more expensive, and more troublesome by the day.  Many companies manipulate consumers and their internet searches into thinking they're getting a better deal than they really are.  That's why states and jurisdictions like Nebraska, Pennsylvania and Washington D.C. have taken bipartisan legal actions against these often-times hidden fees. Consumers should know what they're getting and the complete price from the moment they start looking.  That's just common sense and basic consumer protection."

Over the last few years, deceptive advertising in the short-term lodging industry has significantly increased, with many hotels, motels, and other short-term lodging establishments not disclosing mandatory fees in advance. Some hotels charge separate mandatory “resort fees” or “cleaning fees”, but fail to disclose them until later in the booking process (once most consumers have committed to the property) or at “checkout”. According to an analysis by the Los Angeles Times, at least one thousand of the 40,000 Airbnb listings included in the study charged a cleaning fee that was only $10 less than the nightly rate. The study also found that 83% of short-term rentals in Los Angeles charged a cleaning fee which typically ranged from $5 to $1,500, with one fee as much as $2,500. Furthermore, this report showed that in 2018, across the U.S., hotels generated approximately $3 billion in mandatory hotel fees, an 8.5% increase compared to 2017.