U.S. Congress moves closer to enacting laws for hotel 'junk fee' transparency

On Wednesday, the U.S. Senate Committee on Commerce, Science, and Transportation approved a bill that, pending a majority vote in the Senate, would ban hotel and vacation rental companies from promoting unfair and misleading pricing, commonly referred to as booking 'junk fees.'

The bipartisan legislation known as the Hotel Fees Transparency Act of 2023, introduced by Senators Amy Klobuchar and Jerry Moran last July, aims to establish a nationwide standard for clear and transparent fee pricing across the sector. It is now awaiting a vote from the full Senate.

Within the hotel and rental sectors, unexpected additions to the final bill are often labeled as 'destination,' 'resort,' or 'urban' fees. These hidden costs frequently appear on your bill at checkout without prior disclosure during the booking process and often incur additional taxes and fees. Consequently, the total amount due for a hotel or rental stay can end up being much higher than what was originally expected or advertised.

Pricing structures also vary based on whether the hotel is located in the U.S. or internationally. For domestic hotels, chains like Hilton, Hyatt, and Marriott display prices that incorporate resort fees (excluding tax). In contrast, for hotels outside the U.S., the initial displayed price often falls significantly short of the final amount due.

For instance, when booking the Hilton New York Times Square online, it initially appears that the rate for Hilton Honors members is $267 per night. However, once you proceed to the final booking page, including taxes and a compulsory destination fee, the total rises to $310.35. Even with some mandatory fees included in the initial display, the final price exceeds $40 more than what the booking site initially suggested once taxes are factored in.

The price gap can be even more pronounced for hotels located outside the U.S. For example, The St. Regis Maldives Vommuli Resort displays a nightly rate of $1,781 on Marriott's website. After accounting for taxes and other fees, the final booking amount skyrockets to an astonishing $3,148.56 per night due to added costs for airport transfers, government taxes and fees, and an ambiguous "service charge."

In June, the U.S. House of Representatives also approved the No Hidden FEES Act. Ideally, both laws would complement each other to promote improved pricing practices throughout the industry.

"Today’s Senate committee vote represents a significant advancement toward a more transparent booking experience for guests and an equitable environment across the lodging sector — including short-term rentals, online travel agencies, metasearch platforms, and hotels," stated Kevin Carey, interim president of the American Hotel and Lodging Association, in a statement.

These two bills are part of a broader initiative led by the Biden administration to combat corporate junk fees that unfairly inflate costs for consumers.

"We will not relent until every junk fee we are aware of is either eliminated or brought into the open," remarked Jared Bernstein, chair of the United States Council of Economic Advisers, in a May interview with TPG managing editor Clint Henderson.

Additionally, some states, like California, are taking matters into their own hands against junk fees. As of July 1, California hotels are now required to "clearly and conspicuously" disclose any unexpected fees — including resort and cleaning fees — from the outset. This law also applies to Airbnb reservations.

The hotel and vacation rental sectors aren't the only ones facing scrutiny. In March, federal regulators implemented a new rule to limit credit card late fees to $8. Commercial airlines are also being urged to enhance fare transparency and eliminate junk fees.

Earlier this week, for instance, Biden unveiled a proposal to prevent airlines from charging parents additional fees to sit next to their children during flights.

However, it's not all positive news. Airline junk fee regulations encountered challenges this week when the 5th U.S. Circuit Court of Appeals temporarily blocked a U.S. Department of Transportation rule that mandated airlines to clearly disclose any additional charges.

The regulation, scheduled to be enforced in late April 2025, met significant opposition from U.S. airlines and lobbying organizations, including Airlines for America and the International Air Transport Association.

The panel of judges temporarily suspended its enforcement, indicating that the rule "likely exceeds DOT's authority and will cause irreparable harm to airlines." As it stands, airlines are not required to modify their current price displays, fees, or fares until the matter is resolved.

In summary

While airline junk fee regulations faced a hurdle this week, hotel guests are closer to achieving essential transparency regarding hidden booking charges. If the Hotel Fees Transparency Act of 2023 successfully passes a full Senate vote, hotels and vacation rental companies will be obligated to disclose the actual cost of a stay upfront — a significant victory for consumers.