ThinkReservations allows adding various reservation fees, such as resort, service, and cleaning fees. Depending on how you configure these fees, they may or may not be included in the advertised room rate shown in the online booking engine. Additional guest fees, pet fees, and Default Line Items configured in your room settings will all impact the price per night on the booking engine's results page. See the image below for reference. If your business is located in California, other fee configurations, such as taxes, can cause issues under California law, which requires the initial price per night to include all mandatory fees. See our article California Senate Bill 478 for more information.
There are several ways to incorporate fees. Each method has its own implications. It’s essential to understand these implications to ensure compliance with local regulations to protect your business.
Important: If you have separate fees that increase your rate beyond the base rate, you may be out of compliance. Methods that do not include mandatory fees in the base rate advertised on your booking engine or on third-party booking platforms may not comply with fee transparency laws in some states. We recommend consulting with your legal advisor to determine whether fees must be included in the advertised rate to comply with local laws.
California requires fee transparency effective July 1, 2024. For more information, visit the California Hotel & Lodging Association website.
The FTC has started requiring clients to follow these practices as well. See The Rule on Unfair or Deceptive Fees: Frequently Asked Questions. Please understand that the FTC's ruling on Unfair or Deceptive fees (often referred to as the "Junk Fee Rule") is a major, evolving regulatory topic. Federal regulations surrounding "drip pricing" (revealing mandatory fees late in the booking process) apply broadly, not just in specific states. Non-compliance can result in federal scrutiny and state-level issues.
Options to set up fees
Set It Up as a Default Line Item
Considerations:
Configuration: As a flat fee.
Application: Applied per stay (not per night).
Itemization: Included in your subtotal.
Advertising: Included in the base rate advertised on your booking engine and third-party booking avenues such as Google Hotel Ads and TripAdvisor.
Implications:
Compliance: This method is likely to comply with fee-transparency laws, as the fee is included in the advertised rate, ensuring customers see the true cost upfront.
Set It Up as a Packaged Rate Type
Considerations:
Configuration: As a flat fee.
Application: Can be applied either per stay, per night, or per guest.
Itemization: Included in your subtotal.
Advertising: Included in the base rate advertised on your booking engine and third-party booking avenues such as Google Hotel Ads and TripAdvisor.
Implications:
Compliance: This method is likely to comply with fee-transparency laws, as the fee is included in the advertised rate, ensuring customers see the true cost upfront.
Include Fees as Part of Your Base Rate
Considerations:
Configuration: No special configuration is required other than increasing your rates.
Application: Lumped in with the subtotal (not itemized).
Itemization: Included in your subtotal. Keep in mind that while this is the simplest compliance method, it inflates your Average Daily Rate (ADR) and prevents you from tracking the specific revenue generated by the fee (e.g., cleaning or resort fees) separately in your accounting reports.
Advertising: Included in the base rate advertised on your booking engine and third-party booking avenues such as Google Hotel Ads and TripAdvisor.
Implications:
Compliance: This method is likely to comply with fee-transparency laws, as the fee is included in the advertised rate, ensuring customers see the true cost upfront.
Set It Up as a Tax
Warning: Setting up a mandatory, property-imposed fee as a 'Tax' in ThinkReservations prevents it from being bundled into the advertised room rate. In states with strict fee-transparency laws (like California), this setup is highly likely to result in noncompliance.
Considerations:
Configuration: As a percentage of the total.
Application: Applied each night.
Itemization: Added after the subtotal in the booking engine and on your reservations.
Accounting Reports: Appears as a tax.
Advertising: Not included in the subtotal or base rate advertised on your booking engine or on third-party booking platforms such as Google Hotel Ads and TripAdvisor.
Implications:
Compliance: This method may violate fee transparency laws in some states, as the fee is not included in the advertised rate.
Summary
When setting up reservation fees in ThinkReservations, carefully consider the legal requirements for fee transparency in your state. While configuring fees as a tax can be convenient, these methods might not comply with fee transparency laws. Using a default line item, package rate, or including fees as part of your base rate is more transparent and likely to meet legal standards, providing clear pricing to your guests.
For further assistance and to ensure compliance with local laws, please consult with your legal advisor. ThinkReservations does not provide legal advice.