California Assembly Bill 537 - Pricing Display Legislation

Last Friday I received the following notification from Vrbo:

We are writing to inform you that effective July 1, 2024, California Assembly Bill 537 will prohibit advertising, displaying or offering a rate that does not include all fees or charges required to stay at a short-term lodging (except taxes and fees imposed by a government on the stay). For example, cleaning fees will now need to be included in the nightly rate shown to travelers.

... This information is based on Vrbo’s current understanding of applicable laws and should not be relied on by partners. We encourage you to familiarize yourself with this new California law and seek legal counsel for further guidance.

I was wondering if Owner Rez, or any other users, have any input on this subject. Does it only relate to properties and/or property owners located in California? Or is it to pander to every CA resident  who may be interested in booking a property anywhere in the world?

It's also possible that this is a phishing email. I didn't click on the link.

Any insight would be helpful. And if this is legitimate, and Vrbo's interpretation is correct, what are some possible solutions?

Thank you!

This is not a phishing message, it is legitimately from Vrbo - we got it also, as well as other partner-level communication.

We are not lawyers and have no competency to express legal opinions other than from the perspective of a layman.

Generally, in order to be regulated by a government entity, a person or business has to have presence (nexus) within the jurisdiction of that entity.  So, if you live in Florida and own property in Florida, and someone from California places a booking, that would not put you under the authority of California regulators because you have no business existence there.

Obviously, Vrbo does have offices in California, so must obey California regulations.  But that wouldn't apply to your own Florida-based direct-book website.

As we read it, there are two halves to the regulation:

1. You must allow free cancellation within 24 hours.  Although OwnerRez custom cancellation policies (which match and map to Vrbo's) don't support this option at present, OwnerRez itself doesn't enforce any cancellation policies itself - it simply displays them to you and the guest.  When a cancellation occurs, you manually enforce the policy as you see fit, which also means you can be more generous, including by permitting a free full cancellation within 24 hours even if the cancellation policy doesn't technically allow it.  If your property is in California, this would be wise, as it seems like that would be compliant with the regulation.  If you have no California nexus, we'd view that as up to you.  Note that, as we read the regulation, it doesn't require you to state that as your policy, simply that you do it.

2. Regarding the cleaning charge, the simplest immediate solution is just to not have one, and to adjust your nightly rates accordingly.  There are other things you can do to roll surcharges into rent displays, but it is unknown whether they are technically compliant with the regulation, which is very new and no doubt will be subject to considerable litigation.

It is possible that Vrbo will add additional features to their custom cancellation policy system, in which case OwnerRez will promptly implement them as well.  No announcement or ETA has been made at this time concerning this.

How would this law affect security deposits? This technically is not a charge - but there is not functionality to roll it into the nightly price. It would be against Airbnb terms of service. However it would be important to be able to continue to charge a security deposit. I find that guests are much better at following the rules with a deposit it place. 

I don't myself interpret this law as speaking to security deposits in any way, but no doubt that will be determined over the coming months by the appropriate legal authorities.

Is Ownerrz going to change how they display and manage pricing our hosted wesbites to comply with AB 537 to ensure all fees are transparent and included in advertised prices? 

Kevin,  Thank you for your response.  Should OwnerRez decide to implement this structure no damage billing is billing or CA try to extend this mandate to those renting to Californians, I'd prefer not renting to Californians over complying with CA bill 537.  The 24-hour, free cancelation doesn't work we are not motel operators that book 50% of their stays the same day.

Perhaps CA legislators should concentrate on homelessness, businesses, and people fleeing their state instead of how to format an invoice.  

Perhaps we should keep this conversation focused on OwnerRez and not veer off into political talking points. Just a thought.

As Ken said, OwnerRez won't be canceling anything for you.  It's up to you to figure out what the laws are, whether you are obliged to comply, and whether enforcement is a thing or not.

Or, you could talk to a lawyer, who would actually know whether you even have a nexus with visitors from California, either from a legal and a practical point of view. I certainly don't comply with all the European, Japanese, or Korean rules, if there are any, even though I have plenty of visitors from those regions.  Why? Because I don't care, and the reason I don't care is that the Belgians aren't going to sent their police to the Mojave Desert to enforce whatever rules they have. I just don't care about them because they have no teeth, and it therefore doesn't matter in the least to me whether the Belgians think I have a nexus or not.

I'm fairly certain (though talk to a lawyer) that California considers its nexus to be those people who come to visit California, not Californians who visit other states -- where their laws apply. Ken isn't going to give you that answer because he doesn't want to get the OwnerRez legal department involved -- he's giving you the only answer he can that doesn't introduce OwnerRez to potential liability for answering questions that you should be asking your lawyer.

More to the point is what your OTAs are going to do. They're going to have their lawyers opine, and then they'll implement a system that protects them. I'm going to go out on a limb and say that if you're a host in California, Airbnb is going to allow guests to cancel within the first 24 hours of their booking, and if you're not from California, they're not. Same for Vrbo and the rest of them.

I have had many thousands of bookings, mostly very short. I've had very few cancelations within the first 24 hours, so it just isn't going to be much of an issue.  Also, I appreciate this policy when I have made a mistake booking a flight, or a hotel. It's common throughout the hospitality industry and I don't mind it, if it's that quick my calendar really isn't compromised at all, and I'm fairly certain to get another booking to make up for it.

From a practical perspective this law really isn't significant and all the notifications from Vrbo and others are just CYA behavior from their lawyers.

I Have a help ticket in that Suzee is Currently working on, Thanks Suzee! We have rent, surcharges, and cleaning fees for each booking. Its easy enough to categorize them as rent so our OR website shows one price + tax in the drop down menu the guest see. My questions is the advertised price as set in "General info- Calculation Overrides - Nightly Min /Max. Correct me if I'm wrong but that is the "Advertised price".

Is there a fix to have this  setting reflect my minimum nightly rent + the surcharges and cleaning fees that is going to be accurate, no matter the length of stay? 2 nights vs 3+ nights. 

Airbnb and VRBO have changed their UX experience to display total prices including fees (like cleaning) in the first total. This would meet the pricing requirements for this law, correct? Cleaning fees are not illegal, it’s just that the fee has to be displayed initially, not after several click throughs. This was never my favorite experience as a host or a guest so I’m happy the fees are displayed upfront in the booking process.

Please correct me if I’m understanding this requirement incorrectly.