California Resort Fee Bill Signed into Law

California Tackles Resort Fees: Greater Transparency Nationwide?


10/8/23 Update: Governor Newsom signed Senate Bill 478 into law on Saturday, 10/7/23. Assuming it goes into effect July, 2024 as planned, it's likely to have a nationwide effect and force hotels and lodging companies as well as OTAs and comparison sites to display full, all-in pricing since most national and international hotel brands and companies don't want to exit the California market or try to manage different displays for California vs. non-California consumers.

California Has Two Bills Tackling Resort Fees that could, if passed, lead to greater price transparency nationwide for hotels and short-term rentals. Both have passed the California Senate and are on the desk of Governor Gavin Newsom, who has until October 14, 2023 to sign or veto. If he doesn't act, one or both bills could become statewide law by default.

Senate Bill 537 would require California hotels and short-term rentals of 30 days or less to display, after a consumer's first Web search, a room rate that includes all resort fees and other charges (except government taxes) as of July 1, 2024.

Senate Bill 478, which would also go into effect July 1, 2024, would more broadly prohibit California businesses of any kind (including hotels) from using drip pricing or otherwise advertising prices that don't include all mandatory fees or charges, with some exceptions.

Marriott (as of May 2023) and Hyatt (as of July 2023) now include resort fees in their displayed rates, but hotels such as the Pendry West Hollywood have a $35 “Amenity Fee” that includes aspects typically included in luxury hotels, such as WiFi, in-room espresso, morning coffee/tea in the lobby, Fitness Center, Spa access, overnight shoe shine service, and the like. The fee is mandatory, whether guests utilize these amenities or not. If passed, the California Senate Bill 537 would mandate the inclusion of this fee as part of the initially displayed rate, not just the total rate including taxes/fees.

The California Hotel and Lodging Association in fact is for Senate Bill 537, noting that it “supports a single standard across the lodging ecosystem. Equal requirements must exist for hotels, short-term rentals and other transient accommodations, as well as the various booking channels that exist, from direct options to online travel companies and even metasearch sites, as all mandatory fees are included in upfront pricing so guests can more clearly see any costs associated with their stays.”

Expedia and Airbnb, however, oppose the legislation, on the grounds of it creating a difficult patchwork of standards across states. What may happen is what occurred with vehicle emission standards, where California promulgated stricter emission standards starting in 1967. While initially automakers fought California's stricter standards, more recently, with the major investments U.S. automakers have made in electric vehicles, the automakers have sided with California and the EPA against the oil industry, defending California's standards. With about 12% of the U.S. population and over 14% of U.S. GDP, it could end up being simpler for even the OTAs to display all hotel prices nationwide inclusive of resort fees, should California Senate Bill 537 pass.

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