Event Management

What Does California’s Junk Fee Law Mean for Planners?

Coins stacked atop a contract

Skift Take

Congress is working on a Junk Fee Prevention Act, but California isn’t waiting – its Honest Pricing Law went into effect Monday.

A new state law in California requires businesses to disclose all mandatory costs upfront. It helps combat junk fees, a complaint of meeting professionals for years.

Hotel resort fees and other mandatory extras can add anywhere from $25 to $50 onto a per-night stay. California Senate Bill 478 requires them to be listed at the start of the search process. Chameleon-like in the past, these fees are referred to as destination, facility, or amenity fees. They are the ire of planners. These junk fees are explained at length in Skift’s Megatrends for 2024.

“The law is simple: the price you see is the price you pay,” said Attorney General Rob Bonta in a statement.

Event tickets, hotels, and restaurants in California are now all required to abide by this law. 

“It is crucial to have a clear understanding of the full scope of costs involved when sourcing destinations. Planners must negotiate all fees upfront before awarding a contract to ensure competitive pricing and streamline the bid process. Additionally, protective contract terms must be incorporated to cover any undisclosed fees, which is one of my best practices,” said Carla Bond, VP, of strategic accounts for Prestige Global Meeting Source.

Ancillary Fees a Detriment

“They destroy an event planner’s budget. Being told exactly what the entire rate is upfront is a big advantage,” said Mike Ferreira, owner and founder of Meetings Made Easy. 

One issue: Comparing rates across destinations may now be tricky. “When you see a $400 rate in California there may be massive sticker shock. It seems so much higher than Las Vegas, for example, where the room rate may be $259, but that doesn’t include the $50 or more resort fee,” said Ferreira.

“The devil has been in the fine print,” said Bonni Scepkowski, founder and principal of Stellar Meetings & Events. Service charges of 21-24% have been considered normal in the meetings industry for years, she said. However, with years of experience, she is now an expert at getting these fees waived.

She recently planned a meeting at the Fairmont El San Juan Hotel in Puerto Rico that had a 21% resort fee. “I was able to get that waived which was a considerable amount of money off the budget that helped me close the deal,” she said.

California Junk Fee Law to Help Part-Time Planners

The new California Junk Fee Law will be most beneficial to those who plan meetings part-time. “An administrative assistant goes online to book 20 rooms. She tells her boss they are $300 a night when they are really $380 when you factor in the hidden fees. Her budget is blown,” said Scepkowski. “This new law will help planners like her.” 

As a professional planner, Scepkowski says she combs through the fine print budgeting the meeting down to the penny. “This takes an absurd amount of time and the new junk fee law may help make my job easier.”

California Will Not be Alone for Long 

There are other states considering legislation targeting these fees. Minnesota, for example, recently passed a junk fee law that begins next year. However, the hotel industry is pushing for nationwide regulations instead of a patchwork of state ones.

“As other states adopt similar measures, the entire industry stands to benefit from increased trust and reliability. Based on this required transparency, I do feel we will see some of the junk fees disappear, ultimately leading to more successful and cost-effective events,” said Bond.

Combating hidden and deceptive fees has been a top talking point of the Biden-Harris Administration. The Federal Trade Commission (FTC) proposed a rule banning these hidden fees.

Photo credit: LightFieldStudios / Envato