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Monday 8 July 2024

 

HEADLINE STORY

New ‘junk fee’ transparency laws come into effect in California

 

US: Sweeping new laws have come into effect in California that require travel sellers and other types of businesses to include all mandatory fees or charges in the upfront price.

 

EDITOR'S COMMENT

 

Pricing transparency is a major talking point in the STR industry and the new 'junk fee' transparency laws in California have seen it shoot straight up the agenda again.

 

The two pertinent laws are AB 537 - which will require short-term rental and hotel companies to provide the total price before a visitor checks out, including resort fees, destination fees and facility fees - and SB 478 - which will ban so-called ‘junk fees’ on purchases ranging from hotel rooms to event tickets and food delivery services.

 

Misleading, complex or confusing pricing and refund models, as well as inconsistencies in different markets across the world, have long been pain points for the industry to address and it is clear there is still much work to be done.

 

While cleaning, service and host fees are mandatory charges that appear before a booking is made, each of the major OTAs has its own approach to displaying fees and charges that a guest must pay in advance, but wide divergences in pricing strategies and spiralling fees will only decrease guests' confidence in booking. If they do not get the security they want, guests may either book directly with an operator or opt for another asset class altogether.

 

Airbnb highlighted both pricing visibility and price comparison in its Winter Release last November, as CEO Brian Chesky admitted to wanting to help guests understand exactly what to expect before they book, and to enhance security and transparency for hosts. It may well have already been a priority for Airbnb, but the signing of the California bill last October and President Biden's pledge to rein in junk fees may have accelerated it.

 

All in all, any measures to increase transparency in the short-term rental booking process should be welcomed if the industry is going to welcome new generations of travellers to the segment. We will likely see more states / cities pass laws to a similar extent [a Minnesota junk fee law comes into effect in 2025] and there will also be opportunities for platforms like VacayMyWay to simplify both the booking process for guests and listing process for hosts, while addressing the pain points that traditional OTAs are perceived to struggle with.

 

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EDITOR 

Paul Stevens

Editor - short-term rentals, IHM

paul@internationalhospitality.media

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