With a deep-seated expertise in the travel and tourism industry, particularly in hotel operations and the intricate web of government regulation, Katarina Railko has become a key voice in navigating the hospitality sector’s most pressing challenges. We sat down with her to dissect New York City’s new ban on hotel “junk fees,” a move that is sending shockwaves far beyond the city’s borders. Our discussion explores the widespread operational hurdles this rule creates, the subtle yet significant changes it will force at the front desk, and how this fits into a larger pattern of tightening regulations that could reshape the future of hotel pricing and guest relations.
New York City’s rule banning junk fees, effective Feb. 21, applies to any hotel advertising to its residents, regardless of location. What operational challenges does this present for hotels outside NYC, and what specific steps should they take now to ensure their online pricing is compliant?
The ripple effect of this rule is immense and creates a significant operational scramble for hotels everywhere, not just in New York. A hotel in Florida or California that markets online now has to consider if a New Yorker might see their ad. The primary challenge is a technological and marketing audit. They must immediately review every single distribution channel—their own website, online travel agencies, metasearch sites—to ensure that the first price a consumer sees is the total, final price. This means reprogramming booking engines and retraining marketing teams to stop advertising a low base rate that gets inflated later. The immediate step is a full compliance check of all digital assets to avoid facing the city’s full enforcement authority.
The rule specifically bans unexpected credit card holds and deposits in addition to advertised fees. What are the practical implications of this for a hotel’s front desk operations and revenue management, and how might this change the check-in process for guests?
This fundamentally alters the check-in conversation and a hotel’s financial risk management. The key word is “unexpected.” Front desk staff can no longer just swipe a card for a surprise incidental hold; that practice is now a violation. For example, a guest arrives. Instead of the agent simply saying, “I just need a credit card for the room and incidentals,” the process must now be one of explicit, pre-disclosed consent. The booking confirmation itself should have already stated the exact hold amount. At the desk, the agent will have to say, “As outlined in your reservation confirmation, we will be placing a temporary hold of $150 for any potential charges. Do you approve?” This requires more training, slows down check-in, and forces revenue managers to be completely transparent about their security deposit policies from the very first click.
The Hotel Association of New York supports the rule’s intent but voiced concern that hotels already treating customers fairly are not “unduly affected.” In what specific ways could a compliant hotel be negatively impacted by this rule’s rollout, and what are the key distinctions between a legitimate fee and a “junk fee”?
This is a crucial point because good actors can get caught in the crossfire. A hotel that was already transparent about a mandatory “resort fee” for genuine amenities like pool access, enhanced Wi-Fi, and fitness classes could be negatively impacted. Now, they must bundle that fee into the room rate. This can make their initial advertised price appear higher than a competitor’s, even if the final price is the same, potentially losing them the initial click from a customer. The distinction is really about transparency and value. A legitimate fee is typically for an optional, ancillary service like valet parking. A “junk fee” is a mandatory charge, often called a “destination fee” or “hospitality service fee,” that is tacked on after the initial price is shown, making a fair price comparison impossible for the consumer.
The mayor’s office stated that hidden fees “hurt honest small businesses.” How do these pricing practices at larger hotel chains specifically disadvantage smaller, independent operators, and in what measurable ways might this new transparency level the playing field for them in the competitive New York market?
Larger chains have historically used this strategy to their advantage. They have the massive marketing budgets to advertise an artificially low room rate that draws customers in, only to add mandatory fees at the end. An independent hotel, often operating on thinner margins, typically can’t afford to play this game and prices more honestly upfront. This makes them look more expensive in online searches, so they lose out on bookings. This new rule levels the playing field by forcing everyone to display the all-in price. Now, that small, honest hotel’s true, fair price will be shown right alongside the chain’s true, fair price, allowing for a genuine, apples-to-apples comparison. We could see a measurable shift in booking traffic toward independent operators who offer better overall value once the pricing illusion is stripped away.
New York City has also implemented the Safe Hotels Act and the Hotel Service Disruption Act. Considering this broader regulatory environment, how does the new junk fee ban fit into the city’s overall strategy for the hospitality industry, and what does this signal for future hotel legislation?
When you look at these laws together, a clear strategy emerges. The city is moving aggressively to regulate the hotel industry with a focus on consumer protection, worker rights, and operational transparency. The Hotel Service Disruption Act ensures guests are notified of changes, the Safe Hotels Act imposes licensing requirements, and now the junk fee ban enforces pricing honesty. It’s a three-pronged approach to hold hotels to a higher standard. This signals that the era of light regulation is over, at least in major markets like New York. We can expect to see more legislation targeting everything from labor practices to environmental standards as the city continues to position itself as a protector of both its residents and its visitors.
What is your forecast for the hospitality industry’s pricing models over the next five years?
I believe we are at a tipping point for all-in pricing. What started with the FTC and is now being enforced at the city level by leaders like Mayor Mamdani will become the national standard, either through widespread legislation or industry self-correction to avoid it. Over the next five years, the “resort fee” as a separate, mandatory line item will largely disappear, absorbed into the upfront room rate. In its place, we’ll see a surge in sophisticated, unbundled ancillary pricing. Hotels will move toward a model where the room rate is for the room, and everything else—early check-in, specific floor requests, premium Wi-Fi, pool access—is offered as an à la carte choice during the booking process. This satisfies the need for transparency while creating new, legitimate revenue streams for hotels.
