Mark Pestronk
Q: In mid-December, the Federal Trade Commission (FTC) issued a regulation banning so-called junk fees in hotel and live-event pricing. I have a bunch of questions. What, exactly, does the rule require? Is it just like the DOT full-price airfare rule, or are there differences? When does the rule become effective? Does it apply to advertisements and quotes by travel agencies for hotels and resorts; if so, what if the information that we get from the property or GDS violates the rule and we inadvertently convey the quote as is? Does the rule apply to quotes for corporate travel, meetings and events? Finally, do you think it will be overturned by a court or rescinded by the Trump administration?
A: The new rule requires businesses to clearly disclose, in any offer, display or advertisement, the total price, including all mandatory fees, whenever anyone advertises or quotes any price for the hotel or live event. The rule also requires you to display the total price more prominently than any components of the total price.
The big difference between the DOT airfare rule and new FTC rule is that the DOT rule requires you to include all taxes and government fees in the initial quotes and prominent display, but the FTC rule does not. So in New York or Nashville, where taxes are very significant, the display of the "total price" is still misleading, in my view.
The new rule becomes effective 120 days after publication in the Federal Register. Assuming publication took place in late December, the effective date will be in late April, unless a court issues a stay.
The new rule applies to all sellers of travel, even if your GDS or other booking system generates quotes that don't include all mandatory fees. In other words, if you transmit just what your booking system provides, you, the property or event sponsor and the booking system are all in violation.
Unlike many consumer protection laws, the new rule applies in B2B contexts such as corporate travel bookings and business meetings quotes. The FTC stated that there was no reason not to protect business travel buyers to the same extent as individual consumers.
To a large extent, hotels and booking systems have anticipated the rule and have already stopped advertising and quoting rates that omit resort fees and the like, probably because several states, including California, already have laws that are very similar to the FTC rule.
As with the state rules, credit card surcharges don't have to be included in the total price, unless credit cards are the only accepted form of payment. So, if the hotel allows payment with cash, the credit card fee is considered optional and doesn't have to be included in the total price.
Any hotel or live event promoter or their association can sue to overturn the new rule. Based on the success airlines have had in stopping the DOT's ancillary-fee-display rule, my guess is that a court will overturn the rule even before the Trump administration gets a chance to rescind it.