California Fee Transparency and Cancellations
Summary: AB 537 mandates that all advertised room rates for short-term lodging, such as hotels and vacation rentals, must include all mandatory fees and charges, except for government-imposed taxes. This bill aims to prevent hidden fees and ensure transparency for consumers. Violations can result in civil penalties up to $10,000, enforceable by city attorneys, district attorneys, county counsels, or the Attorney General. The bill becomes operative on July 1, 2024 (Hospitality Net) (Bill Sponsor).
Impact:
- Pricing Transparency: You must ensure that all advertised rates include mandatory fees, such as resort fees.Bonotel has historically communicated these fees clearly, indicating whether they are "inclusive" or "exclusive" to the rate presented. Our rates have always included taxes based on the information provided by our supply partners. Consequently, no material changes are required by Bonotel to maintain compliance with the updated legislation. As long as our downstream customers appropriately display the fee information passed on in Bonotel’s response, they should also be considered compliant.
- Consumer Trust: Enhanced transparency could improve customer trust and satisfaction, potentially leading to increased bookings.
Summary: SB 644 requires hotels, third-party booking services, and short-term rentals to allow penalty-free cancellations within 24 hours after the reservation is confirmed, provided the reservation is made at least 72 hours before check-in. Refunds must be issued within 30 days of cancellation. The bill authorizes public attorneys, including the Attorney General, to enforce its provisions, with civil penalties of up to $10,000 for each violation (LegiScan) (LegiScan) (Bill Sponsor).
Impact:
- Cancellation Policies: You must ensure that your processes support compliance with these new cancellation requirements.Bonotel ensures compliance through its direct connections with hotel suppliers. These suppliers are responsible for adhering to the designated penalty-free cancellation policies and implementing processing logic to ensure that no cancellation fee is charged for valid penalty-free reservations. Bonotel is currently amending all supplier contracts and has developed processes and monitoring to ensure that our suppliers remain compliant.While this approach meets the minimum legislative requirements, it may not provide optimal messaging for travelers. It is recommended that client applications display clear and generalized messaging, indicating that reservations for hotels located in California comply with the state's cancellation policy legislation, even if these policies are not explicitly detailed in structured cancellation messages.
- Refund Process: Implement efficient systems to handle cancellations and process refunds within the stipulated 30-day period.In almost all cases, Bonotel works on a “direct-bill” relationship with clients. This being the case, it is rare that refunds will need to be processed. Instead, cancellations that fall under the legislated criteria will be cancelled without a penalty (even if the initial cancel policy indicated a penalty).In cases where payment is collected prior to the confirmation of the booking, Bonotel will provide prompt support for processing refunds.
- Customer Relations: These policies may enhance customer satisfaction by providing greater flexibility and security, which could positively affect your business's reputation.
Both bills require significant changes in how you present pricing and manage reservations. It is crucial to:
- Update your website and booking platforms to include all mandatory fees in the advertised rates.
- Train your staff to handle cancellations and refunds efficiently.
- Regularly review and audit your practices to ensure ongoing compliance with the new regulations.
These changes are designed to enhance transparency and consumer protection, potentially leading to increased customer trust and loyalty. However, they also necessitate careful planning and adjustments to your current business practices.
For more detailed information on these bills, you can visit the official legislative websites:
This snippet evaluates an example with the following reservation criteria:
Hotel: | The Ritz Carlton Los Angeles |
|---|---|
Booking date: | 2024-06-24 |
Check-in: | 2024-07-27 |
Check-out: | 2024-07-30 |
Adults: | 1 |
Rate Plan: | Non-Refundable |
In this sample policy, the official structured cancellation policy indicates that the “arrivalRangeValue” = 0, which means that the reservation is non-refundable. However, under the new legislation, we must allow a purchaser to cancel (this non-refundable reservation) within 24 hours of making the booking (assuming the purchaser has made the booking greater than 72 hours prior to arriving). Since our hotel partners will process this in adherence to the legislated requirements, the cancellation will be confirmed without assessing a penalty.
However, there is no clear messaging in this structured response that indicates the legislated policy. It is strongly recommended that client applications indicate general messaging to reinforce compliance.