How the New FTC Hotel Rate Disclosure Rule Benefits Travel Managers

Effective spring of 2025, The Federal Trade Commission is implementing the Junk Fees Rule, which prohibits bait-and-switch pricing and other tactics used to hide total prices and bury junk fees in the live-event ticketing and short-term lodging industries. 

Travel and Procurement Managers can now avoid commercial surprises and miscalculations that normally accompany bait and switch pricing. This new rule provides numerous benefits by increasing transparency, simplifying cost comparisons, and potentially reducing unexpected expenses. The regulation is for all hotels operating within the U.S. and any online booking platform offering rooms to U.S. consumers.

According to the FTC Chair Lina M. Khan, “People deserve to know up front what they’re being asked to pay – without worrying that they’ll later be saddled with mysterious fees that they haven’t budgeted for and can’t avoid. The FTC’s rule will put an end to junk fees around live event tickets, hotels, and vacation rentals, saving Americans billions of dollars and millions of hours in wasted time.”

Previous Challenges

• Travelers often encountered surprise fees at checkout (e.g., resort fees, service charges, cleaning fees), making it difficult to plan and compare expenses accurately.
• Budgeting would often fall short due to unforeseen expenses not accounted for during booking.

New Requirements

• Businesses must clearly and conspicuously disclose the true total price inclusive of all mandatory fees whenever they offer, display or advertise any price for lodging. 
• Businesses cannot misrepresent any fee or charge in any offer. 

Exclusions

• Fees for optional ancillary goods or services.
• Charges for items that are not required for the core purchase, such as upgrades or add-ons.
• Discounts for payment via cash vs. credit card.

Summary

Overall, by requiring hotels to disclose all fees upfront, the FTC regulation offers a much needed level of clarity and predictability – helping travel managers plan better, avoid surprises and make informed financial decisions to protect their budgets and enhance the traveler experience.