Navigating new legislation: How California Senate Bill 644 and Assembly Bill 537 impact hoteliers

If there’s one thing we have come to expect in hospitality, it’s change. And, change is coming this summer with the introduction of two new laws in California: California Senate Bill 644 and California Assembly Bill 537. These legislations, effective from July 1, 2024, focus on cancellation policies and pricing transparency, respectively. Understanding and complying with these laws is crucial for hoteliers to avoid penalties and maintain a competitive edge. To help make it easy, here’s a comprehensive overview of these bills, without the legal-ese, and what hoteliers should do to prepare.

What you will see here

• California Senate Bill 644: Enhanced cancellation flexibility
• California Assembly Bill 537: Transparency in pricing
• Action points for hoteliers

California Senate Bill 644: Enhanced cancellation flexibility

Key points:

• Penalty-free cancellations: Guests can cancel their reservations without incurring any penalties within 24 hours of booking confirmation, provided the reservation is made at least 72 hours before check-in.
• Exceptions: If the booking is made within 72 hours of the check-in date, the 24-hour penalty-free cancellation period does not apply. In such cases, hotels can enforce their cancellation policies immediately.
• Scope: This law applies to all hotel reservations for properties located in California, regardless of where the guest is booking from.

Potential impact on hoteliers:

• Increased booking volatility: Introducing a 24-hour penalty-free cancellation period may increase booking volatility. Guests might book, cancel, and rebook frequently, complicating inventory management.
• Competitive pressure: Online travel agencies have traditionally been strict about cancellations, making direct bookings a safer choice if travel plans weren’t firm. With this new law, hotels will need to enhance their direct booking strategies to stay competitive and manage the potential increase in cancellations effectively.

California Assembly Bill 537: Transparency in pricing

Key points:

• Inclusive pricing: All advertised room rates must include mandatory fees, excluding government taxes. This means no more hidden resort fees or charges that might surprise guests at checkout.
• Scope: Similar to SB 644, this law applies to all reservations for properties physically located in California, regardless of where the booking originates.

Potential impact on hoteliers:

• Transparent pricing: Hotels must ensure their advertised rates include all mandatory fees. This transparency can build trust with guests but may also require adjustments in pricing strategies to remain competitive.
• Operational adjustments: Hotels must update their property management systems and booking platforms to reflect the inclusive pricing model accurately. This includes ensuring that all fees are disclosed upfront on all booking channels, including OTAs.

Action points for hoteliers

1. Review and update cancellation policies:

• Ensure your cancellation policies are clearly stated and compliant with SB 644.
• Train your staff on the new regulations and how to handle cancellations within the 24-hour grace period.
• Update your PMS booking engines, CRMs, and other customer touchpoints to reflect these policies.

2. Adjust pricing strategies:

• Recalculate room rates to include mandatory fees, ensuring compliance with AB 537.
• Update all marketing materials and booking platforms, CRMs, and other customer touchpoints to reflect the new all-inclusive pricing.
• Work closely with OTAs to ensure that your rates and fees are accurately displayed.

3. Enhance direct booking campaigns:

• Use the flexibility in cancellation policies to your advantage by promoting direct bookings. While this might not be new for your hotel, OTAs will be marketing cancellation flexibility, so there’s no harm in emphasizing the ease of cancellation.
• Leverage marketing tools like Revinate Marketing to create targeted campaigns that highlight the benefits of booking directly with your hotel.
• Offer incentives for direct bookings, such as exclusive discounts or added amenities, to attract more guests.

4. Communicate clearly with guests:

• Update your website and booking confirmation emails to inform guests about the new cancellation policy and inclusive pricing.
• Ensure that all communications are clear and transparent, reducing the likelihood of misunderstandings or disputes.

5. Monitor and adapt:

• Keep an eye on booking patterns and cancellation rates to understand the impact of the new laws on your business.
• Be prepared to adjust your strategies as needed to maintain occupancy rates and profitability.

The implementation of California Senate Bill 644 and Assembly Bill 537 marks a significant shift towards greater consumer protection and transparency, which is a good thing for travelers and the hospitality industry overall. For hoteliers, this means adapting to new regulations while seizing opportunities to enhance guest satisfaction and loyalty. By staying informed, updating policies and systems, and leveraging marketing strategies effectively, hotels can navigate these changes successfully and continue to thrive in a competitive market.

Of course, we are committed to supporting you through these transitions with both innovative solutions designed to drive direct bookings and enhance guest engagement, and a Support team on stand-by to help you thrive when questions arise. Please reach out if we can help.