The Federal Trade Commission (FTC) made waves in late 2024 when it announced a landmark rule banning hidden and deceptive fees in hotel and short-term rental advertising.
This policy, part of a bipartisan effort, directly targets what consumers call “junk fees” or “drip pricing,” the practice of showing a low initial rate that balloons with unexpected charges once checkout is complete.
Set to go into effect on May 12, 2025, this regulation demands total pricing transparency from hotels, resorts, booking platforms, and short-term rental services such as Airbnb and Vrbo.
The move arrives after years of mounting complaints from travelers who felt lured by misleading discounts, only to find unavoidable “resort fees” and “cleaning charges” tacked onto the final bill.
The new rule forces all companies under the FTC’s jurisdiction to show the total price a consumer will pay upfront, including costs like mandatory service fees, resort charges, or cleaning costs.
For the average traveler, this marks a fundamental shift, one that promises clearer budgeting and less frustration while booking stays across the U.S.
The Road to Reform: How the FTC Built the Case
The roots of this decision go back several years, as consumer groups and state attorneys general repeatedly urged stronger federal oversight over deceptive pricing tactics.
Complaints pointed to a pattern: hotels and platforms would promote a nightly rate like $179 and then add required “destination charges” or “facility fees” of $30 or more once the guest had gone through multiple booking screens.
In 2022 and 2023, the FTC began formally examining the issue, holding hearings and calling on hospitality companies to explain their pricing structures. Enforcement actions followed, with several high-profile settlements setting early precedents.
Travelers were becoming increasingly vocal online, flooding social media with screenshots of misleading quotes. Popular hashtags like #JunkFees and #TransparentTravel gained traction on X (formerly Twitter) and TikTok as consumers demanded accountability.
These growing complaints gave the commission political momentum. In December 2024, after months of bipartisan negotiation, the FTC finalized the rule with clear definitions of what qualifies as an “unfair or deceptive” fee.
Both Democratic and Republican commissioners supported the measure, framing it as pro-consumer and pro-competition.
When the final announcement came, it signaled more than just regulatory reform; it was proof that consumer frustration had transformed into law.
What the New Rule Requires from Businesses
The centerpiece of the FTC’s action is its “all-in pricing” requirement. Every price displayed by hotels, vacation rentals, or booking platforms must represent the full amount a customer would actually pay, excluding only taxes imposed by law.
To enforce compliance, the FTC can impose civil penalties on violators and require restitution for consumers misled by noncompliant pricing.
Businesses found repeatedly breaking the rule risk large fines and reputational hits. Hotel chains and travel platforms are now racing to redesign their pricing systems and online layouts before the May 2025 deadline.
Several industry associations initially raised concerns about the timeline, arguing that integrating all-in-pricing functions into their systems may take months. However, consumer advocates insist the change is long overdue and that businesses have had years to prepare.
As one FTC representative stated during the 2024 press briefing, “A price that isn’t what you’re actually going to pay is not a price, it’s a lure.” That sentiment now shapes the industry’s new reality.
Impact on Travelers: Ending the “Gotcha” Moment
For travelers, this rule could redefine how trips are planned. Hidden charges have long distorted the perceived affordability of hotels and short stays, leading to frustration when receipts arrive higher than expected.
FTC’s junk-fees rule (Credit: FTC)
With all fees disclosed upfront, consumers can finally make fair comparisons between accommodations and avoid those costly surprises.
Consider a traveler booking a three-night stay in Miami. Previously, a room might have been advertised for $150 a night, but at checkout, a $45 nightly resort fee and a $25 cleaning charge appeared, pushing the total far beyond the original quote. Under the new rule, that same listing will now display $220 per night from the start.
The psychological effect is just as important as the financial one. Transparency restores confidence and honesty in the transaction. For families saving for a vacation or small business owners managing travel expenses, such predictability simplifies planning.
It also pressures businesses to remain competitive through genuine pricing rather than obscure add-ons.
Travel influencers and consumer rights advocates have already begun sharing educational content about the rule, teaching followers how to identify compliant listings and reward transparent companies with their bookings.
Hotels, Platforms, and the Business Response
Many major hotel chains have publicly endorsed the rule, seeing it as a step toward improving guest satisfaction and brand trust.
Marriott, for instance, previously agreed to settle allegations in 2023 over resort fee disclosures and has since implemented clearer displays on its website. Following the FTC’s action, other companies are preparing similar transparency policies.
Online booking giants like Expedia and Booking.com are also under scrutiny due to their role as intermediaries. The rule clarifies that third-party platforms are equally responsible for ensuring displayed prices meet the all-in requirement. This means the days of “partial pricing” in aggregator search results are numbered.
There’s also growing optimism among smaller property owners on platforms like Airbnb, who hope that price clarity will cut down on customer disputes and refund requests. Hosts who already charge fair, upfront prices now expect to be rewarded for their honesty.
Still, the transition won’t be without friction. Analysts predict a short-term adjustment period where some travelers notice minor price fluctuations as hotels restructure charges that were once hidden. But in the long run, transparency is expected to benefit both guests and providers by fostering loyalty and fairer competition.
A Step Toward Transparent Commerce
The FTC’s new regulation represents a broader movement within U.S. consumer protection policy, one that targets deceptive pricing tactics across industries. After focusing on entertainment ticketing and airline operations, the hospitality sector was a natural next step.
By banning junk fees and drip pricing, the FTC is aligning with a growing public demand for simple honesty in transactions. Consumers now expect brands to present real numbers without tricks or burdensome fine print. This expectation doesn’t just enhance fairness; it strengthens trust in digital marketplaces.
As the rule takes effect in May 2025, hotels, resorts, and short-term rental providers have a chance to rebuild credibility. With transparency no longer optional, the travel industry enters a new era defined by accountability and genuine value, where the price you see is finally the price you pay.
Airbnb’s announcement on August 25, 2025, signaled a major turning point in its commission model. The company confirmed that the familiar split-fee system, where hosts paid about 3% and guests covered 14–16%, is being phased out.
Starting October 27, PMS-connected hosts will transition to a host-only model charged at 15.5% globally, slightly higher at 16% in Brazil.
For years, this dual-commission setup was one of Airbnb’s most recognizable policies. Hosts enjoyed lower immediate fees, while guests saw a separate “service fee” line added at checkout.
However, Airbnb’s broader shift toward total price transparency, introduced in April 2025, has changed how costs are displayed to guests. Now, only a unified price appears in search results, leaving the fee structure invisible.
The timing of this change reflects Airbnb’s broader operational aim: to simplify pricing presentation and standardize fee systems worldwide.
But while simplicity may benefit travelers, hosts and property managers must now adjust their pricing methods to maintain their earnings, particularly those using property management systems (PMS) integrated with pricing tools such as PriceLabs or Hostaway.
How Airbnb’s New 15.5% Fee Works
Under the new model, Airbnb takes a 15.5% cut directly from the host’s gross payout, covering the nightly rate, cleaning fees, and any extra guest charges. This single fee replaces both the original 3% host commission and the 14–16% guest service fee.
That change might sound steep, but it doesn’t necessarily mean lost income for hosts. The key lies in recalculating rates correctly. As outlined in official guidance, the formula to retain your previous payout is
New Price = Old Price × (0.97 / 0.845) or simply, New Price = Old Price × 1.1479.
This multiplier ensures that, after Airbnb’s 15.5% deduction, hosts continue receiving the same payout they had under the split-fee structure. For example, if a nightly rate was $100 before, it should now increase to $114.79. Airbnb’s 15.5% cut ($17.79) would then leave the host with $97, the same as before.
That 14.79% adjustment becomes especially vital for PMS-connected managers who rely on percentage markups to sync rates across multiple platforms.
Most managers will need to update their Airbnb markups from roughly 3% (used during the split-fee period) to about 18.3%, reflecting the new cost structure and ensuring parity with other channels like Booking.com or Vrbo.
Global Timelines and Who’s Affected Most
The rollout occurs in stages:
- August 25, 2025: Newly connected PMS hosts already begin under the single-fee structure.
- October 27, 2025: Most PMS-connected accounts worldwide switch automatically to 15.5% (16% in Brazil).
- December 1, 2025: Non-PMS hosts on single-fee terms also standardize to 15.5%.
The most significant disruption will hit U.S.-based property managers. Many of them were still using the split-fee setup until now, meaning their effective commission cost rose dramatically from 3% to 15.5%.
Managers across Europe and Asia, by contrast, have been operating under host-only terms since 2020 or 2021, typically at 15%. Their change is minimal, a half-point upward adjustment.
Airbnb Ranking (Credit: Reddit)
Hotels with special Airbnb Travel LLC contracts remain exempt, and listings with stays longer than 28 nights may qualify for reduced host fees. Still, the shift toward a uniform structure means nearly all professional operators will soon face identical terms across markets.
Why Total Price Display Matters More Now
One of Airbnb’s most subtle yet powerful changes came months earlier, when the company started showing the total price (excluding taxes) in search results. This adjustment means travelers no longer see a separate “guest service fee” line; they simply view one all-inclusive cost.
For hosts, that transparency neutralizes the competitive disparity between split-fee and host-only models. Whether a manager pays 3% or 15.5%, the guest never sees the breakdown. The only visible metric that affects booking decisions is the final total price.
This approach resolves long-standing confusion among users and helps Airbnb strengthen conversion rates by reducing surprises at checkout. It also allows property managers to adopt more predictable pricing strategies without worrying about how fees appear to potential guests.
How Hosts Can Protect Profit Margins
For professional hosts, preserving profit margins requires taking proactive steps right now. The basic math suggests increasing all host-charged components, nightly rates, cleaning fees, and any add-ons by roughly 14.8%.
If you use a PMS platform like Hostaway, Guesty, or Smoobu, adjusting your markup is often as simple as updating one percentage field. Typically, you’ll raise it from 3% to about 18.3%. This ensures Airbnb’s 15.5% deduction comes from the gross total while leaving your base rates unchanged in your pricing tool.
Hosts using direct Airbnb pricing (without PMS systems) must manually adjust rates or leverage Airbnb’s pricing calculator via their listing dashboard. A quick spreadsheet formula, multiplying old prices by 1.1479, will ensure consistency across all fees.
The same rule applies to cleaning fees, which also face Airbnb’s deduction. A $100 cleaning fee should rise to $114.79 if you wish to maintain the same payout.
Competitor Fee Comparison and Market Impacts
How does Airbnb’s new 15.5% fee compare to its competitors? Vrbo charges hosts a total of 8% (5% commission plus a 3% payment fee) and adds a guest service fee ranging from 6 to 15%. This structure makes Vrbo less expensive for hosts but more costly for guests.
Booking.com typically applies a 15% base commission, sometimes rising beyond 18% when combined with payment-processing or “Preferred” program costs.
Viewed holistically, Airbnb’s revised model places it roughly on par with Booking.com in terms of host-side charges but potentially more appealing to guests, thanks to the absence of extra checkout fees.
Analysts predict the pricing shift might cause some PMS managers to reconsider channel distribution. Vrbo could attract hosts aiming for slightly higher margins, while Airbnb might appeal to guests seeking clearer and potentially lower all-in pricing.
Yet for most professional hosts, platforms remain less about fee levels and more about audience reach and booking volume.
As Airbnb’s Head of Product Marketing for PriceLabs, Thibault Masson, has emphasized, “This isn’t about losing margin; it’s about understanding the new distribution cost and passing it on smartly.” His statement captures the essence of this transformation: strategic adjustment, not loss.
What Comes Next for Airbnb Hosts
By standardizing its host-only fee, Airbnb is streamlining a process that has often confused both hosts and guests. For PMS-connected managers, the transition period between late October and December 2025 is crucial. Proper markup adjustments will determine whether or not they maintain profitability.
The shift also underscores a broader industry trend of transparent pricing models replacing complex fee breakdowns. Guests prefer clarity at checkout, and Airbnb’s simplified structure delivers just that.
Meanwhile, hosts who recalibrate their rates intelligently will likely find that earnings remain consistent, if not improve slightly, as conversion rates rise under the total-price system.
From a business standpoint, the 15.5% host-only model clarifies where value resides within Airbnb’s ecosystem.
The company gains consistency across markets, hosts gain predictable accounting metrics, and guests gain straightforward pricing. The key is adaptation. With the right calculations, this change doesn’t mark a loss; it marks a recalibration.
