Introduction to Airbnb’s New Pricing Policy

The price displayed on an Airbnb listing will now accurately reflect the final amount paid by the customer. On Monday, the rental app announced that it would display the total price of a stay, including fees and taxes, by default for all listings worldwide. This change in pricing policy comes as a new Federal Trade Commission (FTC) rule, aimed at reducing junk fees and misleading pricing, is set to take effect next month.

The Issue with Hidden Fees

One of the major concerns for Airbnb users has been the exorbitant surcharges, including "cleaning fees," that are often added to the cost of a stay. These fees typically did not appear in the initial list price or on the listing page but would be added at checkout. A 2022 NerdWallet analysis found that the median cleaning fee for a one-night stay was $75, which often accounted for 25% or more of the total price.

Airbnb’s Previous Pricing Policy

Airbnb has been displaying the total price by default in Europe, Australia, Canada, and Korea since 2019, due to existing regulations in these regions that require price transparency. In 2022, the company gave users in the United States and other countries the option to toggle on the full price. According to Airbnb, 300,000 listings removed or lowered their fees after the price toggle tool was introduced, with about 40% of listings eliminating the cleaning fee altogether.

The Impact of the New Policy

The key phrase "toggle on" is important, as the feature was previously something that users had to opt into. Airbnb claims that 17 million guests have done so, which is not surprising, given that there is no reason for consumers to want to hide the full price. The new policy will provide transparency and clarity for customers, as the total price will be displayed from the start.

The Looming FTC Rule

The "full price by default" move is likely related to the upcoming FTC rule, which will require businesses to clearly display the total price, including fees, from the beginning. The rule, introduced under the Biden administration, aims to crack down on junk fees and will become law on May 12. However, the rule’s future is uncertain, as the Trump administration is attempting to roll back other junk fee-related protections.

Conclusion

The new pricing policy is a step towards transparency and clarity for Airbnb customers. While the future of the FTC rule is uncertain, the change is a positive step towards reducing hidden fees and providing customers with a clear understanding of the total cost of their stay. As the rule is set to take effect next month, it remains to be seen how it will impact the industry and whether it will be rolled back by the Trump administration.