The Federal Trade Commission (FTC) has taken a bold step to improve transparency for consumers by banning hidden “junk fees” in hotel bookings, event tickets, and short-term rental platforms. The new rule, announced on December 17, 2024, aims to ensure that customers see total pricing upfront, eliminating surprise charges at checkout.
So, what does this mean for vacation rental hosts and guests on platforms like Airbnb and VRBO? Here’s a breakdown of the key changes and how they might impact the short-term rental (STR) industry.
What Are Junk Fees and Why Are They Banned?
Junk fees refer to hidden costs that are added during the checkout process, often catching consumers off guard. For example:
Hotels may advertise a low nightly rate, only to tack on mandatory “resort fees” later.
Event ticket platforms often add steep service charges right before purchase finalization.
The FTC’s new rule mandates businesses to display the total price upfront—including taxes and fees—allowing customers to make informed decisions without hidden surprises.
FTC Chair Lina Khan emphasized that these fees often harm competition by making it difficult for consumers to compare “apples to apples.” When the final price is not clear, businesses advertising deceptively low prices gain an unfair edge.
How This Could Affect Vacation Rental Platforms
Platforms like Airbnb and VRBO have faced growing scrutiny over their fee structures, which often mirror the same transparency issues as hotels. Guests frequently see an enticing “base price,” only to encounter additional charges like:
Cleaning fees
Service fees
Platform fees
Local taxes
These fees can sometimes add 20-40% to the initial rate, leading to frustration among guests.
With the FTC’s ruling, the short-term rental industry could see the following impacts:
Total Pricing Will Be Required Upfront Platforms may need to clearly display the total cost, including all taxes and fees, from the very start of the booking process. This could significantly reduce the shock of seeing a much higher total at checkout.
Airbnb, in fact, has already made strides toward this change. In 2022, the platform introduced an “all-in pricing” toggle to show total costs upfront, though it wasn’t the default view for all users. The FTC’s rule would likely make total pricing the mandatory standard.
Improved Consumer Trust and Satisfaction Transparent pricing can build trust with guests. Travelers often abandon bookings when they feel “tricked” by hidden fees. By showcasing upfront costs, hosts and platforms could experience fewer cancellations and improved reviews.
Impact on Host Pricing Strategies For hosts, this shift may necessitate revisiting how they structure fees. Many hosts rely on low nightly rates to attract attention, then offset costs with cleaning or service fees. With the total price on display upfront, hosts may need to adopt more competitive pricing strategies that factor in all costs.
Platforms like Airbnb and VRBO will also likely encourage or require hosts to consolidate fees to align with the new transparency standards.
Fairer Competition Total pricing levels the playing field. Guests will have an easier time comparing vacation rentals with hotels or alternative accommodations. While this means more pressure on hosts to offer competitive pricing, it could also benefit STRs by highlighting the true value they provide compared to traditional hotels.
What Does This Mean for Hosts?
For hosts and property managers, this rule is both a challenge and an opportunity:
Adopt Transparent Pricing: If you haven’t already, consider including cleaning and service fees in your nightly rate to provide a clearer price. Being upfront about costs can help you stand out in a competitive market.
Focus on Value: Highlight what makes your rental worth the price—whether it’s personalized service, amenities, or unique experiences. Guests may be more willing to pay for transparency.
Monitor Platform Policies: Platforms like Airbnb and VRBO may introduce new requirements for fee disclosures, so staying informed will be key.
Conclusion: A Win for Guests and the Industry
The FTC’s ban on hidden junk fees is a win for travelers seeking clarity and fairness in pricing. While vacation rental platforms like Airbnb and VRBO are not the primary targets of this rule, they will undoubtedly be affected. The shift toward transparent, upfront pricing will reshape how hosts set rates and how guests make decisions.
For hosts, embracing this change as an opportunity to build trust and provide value will be essential. After all, transparency isn’t just a legal requirement—it’s also a key to creating better guest experiences and building long-term success in the vacation rental market.
Stay tuned as platforms roll out changes in response to the FTC’s ruling. The future of short-term rentals is more transparent, competitive, and guest-friendly than ever.
What are your thoughts on this FTC decision? Are you ready to adjust your pricing strategy? Share your perspective in the comments!
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