Pricing and charging
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- It is a criminal offence for accommodation providers, among others, to give guests misleading information on the prices charged for accommodation and any related facilities, services or goods.
- It is an offence not to do everything reasonably possible to correct a price indication that has subsequently become misleading if it is reasonable to assume that customers will still be relying on the original price information.
- Prices must include VAT if you are VAT registered.
- You cannot charge customers for paying by credit/debit card as of January 2018.
Does this apply to me?
Almost certainly yes: the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) cover all statements of price.
It will normally apply to all accommodation providers whether the price is:
- stated in an advertisement, a brochure, a leaflet or on a website
- given in an email or text message
- given by letter or over the telephone
What does the legislation require?
It is a criminal offence for you to give guests misleading information on the prices charged for accommodation and any related facilities, services or goods.
It is also an offence not to do everything reasonably possible to correct pricing information that has subsequently become misleading if it is reasonable to assume that customers will still be relying on the original price information.
The Chartered Trading Standards Institute's Business Companion website contains a series of both quick guides and in depth publications on all aspects of trading standards. Included on the site is a good practice guide on how to comply with the Consumer Protection from Unfair Trading Regulations. They also produce a guide specifically related to the pricing of goods and services, Price marking of goods for retail sale. This gives practical guidance on how to avoid giving misleading prices. Compliance with the guide, while not an absolute defence, will assist you in showing that you have not committed an offence under the Act.
For hotels and restaurants all non-optional extras (such as a cover charge) should be included in the price and accompanied by a clear statement about what the price includes. Where non-optional charges vary, you should give clear information about the charging structure at the outset to enable customers to easily calculate the cost before agreeing a purchase.
All prices given to customers should include VAT. The message is that customers should not get any surprises when it comes to paying the bill.
Displaying prices on your premises
The Consumer Protection from Unfair Trading Regulations 2008 (CPRs) require you to be open and honest in your pricing and to not mislead or leave out information that could affect the purchasing decision of your customers (see 'Unfair trading practices' for further information).
While there is no specific regulatory requirement regarding the display of prices in reception, it is recommended that you do so in order to fulfill your obligations under the CPRs. This price list should be in a prominent position and be easy to read. It is suggested that the price list you display should include:
- the price of a bedroom for one person (for example, £55 per night) if all the rooms are the same price, or the lowest and highest price (for example, £50-60 per night) if there is a range of prices
- the price of a bedroom for two people
- the price of a bed in any other type of room
- whether or not accommodation prices are inclusive of breakfast or other meals.
All prices must include VAT and any compulsory service charge. You must make it clear if meals are included in the price.
Further information on displaying prices in hotels is available from the Chartered Trading Standards Institute website.
Bonds/card payments in case of damage
The practice of taking bonds (or damage deposits) as protection against damages when accepting a booking is becoming more uncommon, as businesses are tending to retain customers’ credit or debit card details in case of damage. If you wish to either charge a bond or to retain customers’ card details so that you can charge for any damages, you must notify customers of this prior to the booking being agreed (while this can be done verbally, it is far better to do it in writing in case there is any dispute).
It is important to note that you are only able to retain money from the bond or charge a customers’ card if the damage has resulted from a deliberate act (e.g. kicking in walls) or negligence (actions whereby it was reasonably foreseeable that damage would occur). You are not able to charge for damage that results from general 'wear and tear', e.g. marks on floors, an electrical item failing or a cup breaking during washing-up.
To protect against disputes, it is good practice to show a customer around a property so that any pre-existing damage can be recognised and agreed (as car hire companies do) and to get photographic evidence of any damage, so this can be used to support your actions if the customer or their credit card company queries the charge. Also, three quotes should be gained on any repairs to show that the amount being charged is justified.
Finally, it is important to note that the requirement for guests to provide a bond or pay for damages must be applied in a fair and consistent manner that does not breach anti-discrimination law. That is, the requirement should be imposed on all guests and cannot just be imposed on the basis of race, disability, sexual orientation, age or gender. For example, you cannot require a bond from a group of young male customers if you do not require it from other groups of customers.
The end of credit and debit card charges
Following a public consultation, the Government has introduced legislation that bans businesses from adding payment charges for paying by credit or debit card.
This new legislation is the result of the EU Payment Services Directive II, building on the 2015 EU Directive of the same name that limited the charges to the actual costs imposed by the card company. The UK Government has expanded on this requirement by also making it illegal to make any additional charge where payments are made using charge cards such as American Express and electronic forms of payment such as PayPal.
In essence this means that the price you advertise a product for has to be the price that the customer pays at the end of the booking process. However, you are allowed to increase the headline cost of your product to compensate for not being able to charge the card fees if you wish.
The law also only applies to purchases made by personal consumers and not to purchases made by businesses. So, if your customer is a business (e.g., a company booking rooms for an away day or someone travelling on business) then you are allowed to charge a card processing fee, provided that it is no more than the cost to you of processing the transaction.
However, in this situation it is important to note that a business traveller must be using a business card for you to charge a fee. You cannot charge a card processing fee if the business traveler is using their personal card, regardless of whether they will reclaim the accommodation as a business expense later.
There is currently a debate as to whether the new legislation allows you to introduce a ‘booking fee’ or ‘service charge’, provided that this charge is applied uniformly regardless of how the payment is made. For example, Deliveroo have recently replaced their 50p card surcharge fee with a 50p service fee, which is applied regardless of whether someone pays by card or with cash.
However, this approach is being challenged and the Advertising Standards Authority has pointed out that current legislation requires that all non-optional charges be included in or alongside the advertised price. Therefore, if you were to charge a separate booking fee, you would need to put this alongside your advertised prices and not simply add it to the cost at the end of the booking process.