Duff on Hospitality Law

Good Sunday morning from Seattle and happy holidays . . . Well, we definitely missed this one. Last week I wrongly predicted that we would see little near term progress on national junk fee regulation. With leadership at the FTC poised to change with the upcoming presidential transition, many thought that the FTC’s ongoing efforts (and draft rule) were likely to be delayed or even killed. Outgoing leadership at the FTC apparently thought differently.

On Tuesday (December 17), the FTC announced its final junk fees rule. The final rule is much narrower than the proposed rule that was issued in October 2023 (and garnered 60,000 comments) and focuses exclusively on live-event ticketing and short-term lodging (i.e., hotels and short-term rentals). A few key highlights to consider:

• • The rule does not prohibit resort or amenities fees (or any similar pricing model). Hotels may still impose the mandatory charges.
  • The rule requires that the total price (rate plus other mandatory fees, excluding taxes) be clearly and conspicuously displayed whenever pricing is displayed or advertised. The total price must also be more prominently displayed than other pricing information.
  • The new rule applies both to hoteliers and other third-party distribution platforms.
  • The rule goes into effect 120 days after being added to the Federal Register (date uncertain) and could be invalidated by an act of Congress under the Congressional Review Act. The fact that the rule does not even go into effect until months into the Trump administration caused one FTC commissioner to dissent to the proposed rule – not on substantive grounds, but on procedural.

We’ve included below two of the many stories published this past week about the new final regulation. We’ve also attached copies of the many materials released by the FTC when the final rule was announced, including the full text of the rule and its background details.

If you have questions about the new rule or how it might affect your operations, please let us know. We are working with several clients on the implications of the final rule.

Have a wonderful holiday everyone.

Good Sunday morning from Seattle . . .   Our Online Travel Update for the week ending Friday, December 13, 2024, is below. 

Google and its “efforts” to comply with the DMA again garnered most of the industry’s attention.  As I said last week, expect this story to continue well into 2025.  Skift also provided a helpful status update on federal efforts around junk fees.  With the upcoming change in administrations in DC, I don’t expect to see any real progress federally around junk fees for some time (thus leaving open the door for states to regulate the issue themselves on less than a uniform basis (e.g., see Minnesota’s new junk fee requirements, which take effect in the New Year)).  Finally, airline loyalty programs continue to be under the microscope.  Why, you ask, should we care about airline programs?  The short answer is that airline programs and the rules that govern them (even possible new rules) are instructive when creating or operating any other form of loyalty program – including hotel programs.  Enjoy.

• • Google’s Latest Display Changes Draw Criticism from Platforms and Hoteliers.  In its ongoing efforts to comply with the European Digital Markets Act (DMA), Google recently tested changes to its display of hotel search results that removed its interactive map and associated free booking links; other links to intermediary booking platforms (the traditional “blue links”) remained.  According to Google, the changes, which were conducted in only three European countries, resulted in a significant drop of traffic to hotels while traffic to the intermediaries remained largely constant.  Google’s announced results come just weeks after a group of booking intermediaries criticized Google’s compliance efforts. 
    
    
  • Booking Holdings Expects $450M in Annual Savings from Organizational Changes.  The planned changes, which were announced earlier this year, will include job cuts at flagship, Booking.com, which alone are expected to produce over $100M in annual savings.   Additional savings are expected from modernizing processes and reducing their real estate portfolio. 
    
    
  • Airline Loyalty Programs Under the Microscope.  Airline loyalty programs are currently the subject of several ongoing investigations, including investigations by the Department of Transportation, the Justice Department and the Consumer Financial Protection Bureau.  The investigations (some of which we have written about previously) are largely focused on program changes that devalue the programs’ awards or benefits.  While the future of these investigations may be in jeopardy following the recent election, the rising chorus of consumer complaints regarding the programs is likely to continue.  More than ever, frustrated consumers have taken their concerns to social media channels, and trusted loyalty program resources (e.g., The Points Guy, Point.me) have questioned recent program changes.  For hoteliers, there are many potential lessons here, most importantly that plans to amend existing programs (particularly, any direct or indirect devaluing of credits) must be considered in light of likely (and possibly, extremely vocal) consumer backlash. 

As the year draws to a close, I suspect we’ll find fewer and fewer “Update worthy” stories to share.  You may not hear from us again until our annual “year in review” Update, which we usually circulate shortly after the New Year.  If we don’t connect before, I hope everyone has a wonderful holiday season.  Here’s to a great 2025 for you and your families.

Good Sunday evening from Seattle . . .  

As many of you know, I returned a few weeks ago from an extended sabbatical – three months well spent traveling, cooking, reading and driving my wife crazy.  Now that I am back in the office, it is time to start again our Online Travel Update.  We are using this opportunity to re-format things a bit and to re-commit ourselves to identifying the stories that we feel are most important and relevant to our clients; we all receive far too many “industry” updates each day and/or week.  For that reason, we may not circulate an Update each week.  If there is nothing important to share, there is no need for an Update.  Our Updates will also continue to feature comments from me, though you may find that my comments more than ever reflect my particular opinion, viewpoint or cynicism on a specific story or issue.  If you ever disagree with me, let me know.  I always welcome your feedback.

Finally, if you have ideas on how we might improve our Update, please let us know.  We want to make our Updates as helpful as possible.  If you know someone who might benefit from the Update (or even better, might benefit working with our hospitality team), please also let me know.  Thank you for being part of this newsletter. 

Now on to the Update . . .   Stories from the past two weeks are below.  Hotel fees and pending federal legislation seeking to uniformly regulate hotel fees remain an important industry issue.  Other updates reflected in the stories below include Google’s ongoing efforts to satisfy EU regulators and Expedia’s off and on relationship with Hopper.  Did Hopper really improve its customer UX such that Expedia is now comfortable working with Hopper or did Expedia’s new leadership’s desire to restore revenue lost as a result of terminating the Hopper relationship drive this latest decision?  Finally, did anyone listen to the recent Expedia quarterly earnings call (or read the associated transcript)?  I know at least one of you did because we talked about it last week.  I don’t know about you, but if you listen carefully to Expedia’s announced plans around packages (as explained by new Expedia CEO, Ariane Gorin), Expedia seems poised to turn packages and the use of package rates on their head.  Give it a listen or read.  It may be time to ask start asking questions of your Expedia account rep.  Enjoy.

• • Industry Groups Voice Strong Support for Federal Junk Fee Legislation.  It isn’t every day that both AH&LA and the Travel Technology Association speak out in favor of the same issue.
    
    
  • Industry Layoffs Are Not Limited to Hoteliers.  In recent weeks, much has been written about re-structurings and layoffs occurring at the large hotel companies.  This past week, we were reminded that these same re-structurings and layoffs are also occurring with some of the largest distribution platforms (Expedia earlier this year and now Booking Holdings).  Booking Holdings’ recent announcement regarding the layoff of 60 employees at one of its business units, Rocket Travel, raises interesting questions about Booking Holdings’ overall business (B2B) strategy. 
    
    
  • First Hoteliers, Now Online Travel and Tour Companies Voice Concern Over Google’s DMA Changes.  Something tells me that we will be hearing and reading a lot about this issue for weeks and months to come.  Expect to see more from us on this issue in future Updates as I get my arms around these latest changes.

Have a great week everyone.