FTC Bans Junk Fees: How the Hospitality Industry Must Adapt

Pricing tactics in the spotlight

For years, hidden fees have been the industry’s secret weapon. Need to keep prices low to stay competitive? Add a resort fee later. Want to entice customers online? Advertise a rate that looks great—until the checkout screen says otherwise. But this strategy has come under fire as consumers, weary of these “junk fees,” have grown louder in their demands for clarity.

The FTC’s rule doesn’t outlaw fees outright. Instead, it makes them impossible to hide. Every mandatory cost, whether for Wi-Fi, cleaning services, or facility access, must now be prominently disclosed upfront. While this move benefits consumers, it leaves businesses facing tough questions about how to adapt.

Competing on transparency

This rule flips the script on how businesses compete. Without hidden fees as a tool to manipulate perceived costs, companies must now focus on the real value of their offerings. On the surface, this might sound simple, but the implications are profound.

First, businesses that rely on artificially low prices to undercut competitors must find new ways to stand out. Suddenly, base rates aren’t the whole story—they’re the only story. This could create a moment of reckoning for smaller operators: innovate or risk getting left behind.

At the same time, transparency can be an opportunity. Consumers are increasingly drawn to brands they trust, and businesses that embrace the rule proactively could position themselves as industry leaders. If handled well, transparency might not just meet regulatory requirements—it could boost customer loyalty.

The hidden fee hangover

Of course, hidden fees weren’t just a nuisance for consumers—they were a reliable revenue stream for businesses. For example, resort fees that scale with the number of occupants in a room allowed hotels to profit from group stays without raising the base rate.

What happens now? Many businesses will likely raise their advertised prices to compensate for the lost income, but this comes with risks. Higher prices can scare off budget-conscious customers, even if the total cost hasn’t changed. Some businesses might explore alternative revenue streams, such as charging for additional services or amenities previously bundled into fees.

This adjustment period will be tricky. Consumers will scrutinize businesses more than ever, and any misstep could erode trust.

What comes next

Some, like the American Hotel & Lodging Association (AHLA), see opportunity in the uniformity this regulation brings. "For years, AHLA has been leading the charge to establish a single, federal standard for lodging fee display across the industry because consumers deserve to have transparency no matter where or how they book their stays," said AHLA President Rosanna Maietta. But let’s be honest—change doesn’t come easy.

Business owners now face critical questions:

• Will customers balk at visibly higher upfront prices even though nothing has fundamentally changed?
• Can businesses effectively communicate the value behind their offerings without relying on hidden fees?
• What new pricing strategies could emerge as a result?

This isn’t just a regulation; it’s a cultural shift. Businesses that respond quickly, with authenticity and foresight, have a unique opportunity to lead. But those who resist or scramble at the last minute risk falling behind in a marketplace moving toward greater accountability.

The clock is ticking. With 120 days until the rule takes effect, the question for business owners isn’t just how to comply—it’s how to thrive. Will your business rise to the challenge of transparency, or will you get left behind in the old world of hidden costs? The decision is yours.

One thing is clear: the FTC’s rule is about more than junk fees. It’s a reset button for industries that have relied on smoke-and-mirrors pricing. As consumers adjust to this new reality, businesses prioritizing transparency could lead to a new era of trust and competition.