The New Hotel Rule About Pesky Hidden Add-On Fees That Has A Big Impact On Guests

Few things are more disappointing than believing you've finally found your ideal vacation accommodations — perfect location, style, and perhaps most of all, price — only to click the "book now" button and discover that added fees not disclosed in the listing push the final price beyond your budget. It's a fact of life that leaves many of us begging for transparent pricing. And our prayers are about to be answered. In December 2024, the Federal Trade Commission (FTC) announced a ruling to prohibit junk fees, the term used to describe the bait-and-switch pricing practice that lures buyers in with one price, but dashes their dreams when the final price reveals the previously hidden fees. It's one reason why you should think twice before renting a local apartment to save money while traveling.

The FTC began investigating junk fees in 2022, issuing a call for public comment. More than 12,000 responses later, it was clear that consumers were fed up with undisclosed fees and the impact they have on the bottom line. A public statement issued by the FTC at the time cited consumer concerns, including a tendency by sellers to misrepresent or bury fees well into the buying process.

"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," former FTC Chair Lina M. Khan said in a statement following the announcement. While the FTC's junk fee ruling does not prohibit add-on fees, also known as resort, convenience, and service fees, it does require transparency in price. That means the total payment due, including all applicable fees, must be prominently displayed before a potential customer proceeds to book a stay. One primary goal of the FTC action is to make it easier for consumers to comparison shop when searching for accommodations. The all-in, upfront total fee does not, however, have to include taxes.

A follow-up call for comments in 2023 drew a whopping 60,000 new responses, all of which the FTC considered when drafting the December 2024 final ruling. The legislation goes into effect 120 days after it was published in the Federal Register, so the new policy will become official sometime in April 2025. In the meantime, a significant number of lodging establishments across the country have already adjusted their pricing policies to align with the new rule. That's especially true in states that already have similar regulations on the books. 

Early in the review process, FTC's Lina Khan estimated U.S. citizens were paying tens of billions of dollars annually in undisclosed junk fees, sometimes without ever knowing exactly what the fees cover. Clearly, the fee gambit had become a significant profit center for the hospitality industry, but where did it all begin? Details are sketchy, but it appears the practice of adding special-access fees began in the late 1990s when hotels began charging guests to use the on-site gym or swimming pool. Guests who didn't want or need access didn't have to pay the fee. The relatively straightforward fee averaged about $10 a day. The idea caught on, and hotels started adding the charge regardless of whether or not the guest planned to use the services — and then the cost-per-day began to creep up. The introduction of hotel-wide Wi-Fi gave the add-on fees a boost, as guests openly accepted opt-in fees to access wireless internet access. As Wi-Fi became more of an expected service than a welcome novelty, those same hotels began to advertise free Wi-Fi. But is it really free? Not so much. The charge was just rolled over into an often-vague resort fee.

The ambiguity of what a generic resort fee covers can lead to confusion. Potential patrons can't decline the fee during the booking process, but the lodging industry has, until now, been under no obligation to itemize exactly what the fee covers. Often, it's safe to assume the fee is added in exchange for services like Wi-Fi access and entry to on-site facilities like a swimming pool or fitness center. The catch is, there's no mechanism to decline the service fee, even if you have no intention of using the facilities. It all adds up. A recent NerdWallet survey pegged the average per-day resort fee at $35, with some lodging establishments charging as much as $50 per day. That caveat becomes particularly annoying when the fee covers add-ons that may seem appealing at first glance, but may be more about aesthetics than practicality.

Andaz Maui at Wailea Resort, a Hyatt hotel and one of Hawaii's most luxurious resorts, adds a $50 per-day resort fee to its room rate. The fee covers free snorkel equipment and free ukulele, hula, stand-up paddleboarding, and coconut-husking lessons, among other "free" things. Sounds good, but all that free stuff comes with a price tag of an additional $350 for a one-week stay. Are ukulele and coconut-husking lessons really on your vacation radar? Despite the recent FTC ruling about transparency, so-called junk fees are unlikely to go away anytime soon.

"They've been a significant source of top-line revenue," Romy Bhojwani, senior vice president and head of asset management, HHM Hotels, Philadelphia, told Hotel Investment Today. "What's great about resort fees is that they don't have a lot of operating costs associated with them ... So, the flow-through margin contribution from that additional revenue is pretty significant to the bottom line." Overall, vague and expensive resort fees are just one red flag to look for when booking a hotel.