California’s Fair Pricing Act requires businesses to disclose all fees and charges, but it has an effect far beyond its borders and is great for consumers.
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What “honest pricing” requires
California’s new Honest Pricing Law (SB 478) or Hidden Fees Statute is scheduled to take effect on July 1, 2024. The law aims to eliminate hidden fees and mandatory surcharges that are unavoidable in the purchasing process. The simplest example of course is resort fees or even more creative “destination fees” for properties that have nothing to do with a resort. These are unavoidable fees that significantly increase the nightly rate, but allow hotels to compete with cheaper hotels that don’t charge them by not listing them. This is not really fair to the customer and it is not representative of the total cost.
California law SB 478 makes this illegal in the Golden State.
“This is a transparency law,” California Attorney General Rob Bonta said. “The law is simple: the price you see is the price you pay. » – Seatrade
The California Department of Justice summarized it as follows:
“The law “specifically aims to prohibit trickle pricing, which consists of announcing a price lower than the actual price a consumer will have to pay for a good or service.” Advertising or displaying a price lower than what will ultimately be charged to the consumer is a form of deceptive advertising that also violates applicable state and federal laws. And;
“The law requires honest prices. It prohibits businesses from “(a) advertising, displaying or offering a price for any good or service that does not include all mandatory fees or charges” other than taxes or fees imposed by the government or reasonable shipping charges. – California DOJ
Optional fees are not part of the mix. For example, Marriott should include resort fees, destination fees, mandatory cleaning fees, or anything that can’t be deducted from a bill, but it shouldn’t include incidental fees like parking because they are optional. Airlines will continue to set fares as they are, consistent with federal law, because as essential as a carry-on bag or seat assignment may seem, they are not required to use the service.
It’s no surprise that the good state of California has excluded its own mandatory costs from pricing – sales tax is not required to be included in the new pricing rule.
How travel brands are responding
Some hotel chains, in response to similar legislation in Colorado and New York, have already forced chains like Marriott to settle out of court and include these fees in the prices they present to customers. IHG and Hyatt have a similar policy, while short-term home-sharing giant Airbnb has the option to include fees everywhere outside the relevant jurisdictions, but it doesn’t default to showing the full cost.
The purpose of resort fees is to hide the true cost and compete with cheaper properties while charging a higher nightly rate once the guest checks in or completes the purchase. Even if represented before processing the transaction, the customer has already narrowed their choice of hotels and would have to start the process again based on their true budget.
In an interesting change, most “contemporary” cruise lines that determine many elements of the fare have decided to include almost all fees in their fare.
Note: Much like airlines segmenting costs, cruise lines have until now set the fare separately from taxes, fees, port charges and gratuities.
Carnival Cruise Lines, the largest by ship volume (100) across nine brands including Cunard, Princess and Seabourn, has made California’s Honest Pricing the model nationwide, regardless of departure, point of purchase or residence of the traveler.
“Our total advertised price will now include all government-mandated taxes, fees and port expenses that we previously detailed separately for consumer awareness. Although this is a California state law, we are making this change nationwide to ensure our advertised prices are consistent no matter where guests purchase our cruises. Consumers and travel advisors will see the new prices announced starting July 1. » – Seatrade
Royal Caribbean, second in ship volume (40) but nearly twice Carnival’s market capitalization, has three affected lines: Royal Caribbean, Celebrity and Silversea, although the latter has always included these fees in its fares and does not will need no other branding. changes.
MSC will comply with the law from June 26; its luxury Explora Journeys line already includes them in the price. Norwegian Cruise Lines with Oceania and luxury line Regent Seven Seas will also set pricing policy nationwide. Viking and Disney have also made it clear that they will be ready by July 1st.
Is this enough to end resort fees everywhere?
Marriott had to be sued, but resort fees are now included in prices across the board and larger chains have followed suit. Rather than complying only with California, cruise lines have made the policy the norm not only for the United States but also for Canada in most cases.
This move may be a unilateral act of goodwill, but I suspect these mega-corporations assumed that more states would add similar policies and that, rather than adding rules throughout the system, it would be less costly and easier to simply adopt the most aggressive standard and make it uniform.
It is possible that as states mandate these pricing practices and suppliers comply on a larger scale, other major markets will add similar requirements, completely changing the pricing model for travel industry products. .
What do you think?
