Room Pricing During Crisis Situations

The state's law prohibits businesses from raising the price of an item by more than ten percent following a declaration of emergency (California Penal Code 396).

During previous crises in California, there were many, many instances in which hoteliers and innkeepers showed their generosity by providing free or discounted lodging to firefighters, displaced homeowners, and others who had to deal with a specific disaster and their aftermath. Unfortunately, there were also a few who used this situation as an excuse to raise their rates substantially. As a result of these latter actions, California enacted Senate Bill 1363, which restricts the extent to which lodging operators can change their room rates following a natural disaster.  SB 1363 was amended to recognize the realities of the lodging industry, and as signed by the governor, it prohibits hotels from raising rates more than ten percent for 30 days after the disaster declaration, but it permits seasonal adjustments in rates that are regularly scheduled, previously contracted rates, and rate adjustments directly attributable to additional costs for goods or labor used by the hotel or inn.
A violation of this prohibition is a misdemeanor. Penal Code Section 396(g) provides: A violation of this section shall constitute an unlawful business practice and an act of unfair competition.

Should you have any questions, please don't hesitate to contact us. CH&LA and CABBI members with questions or concerns about this issue should contact CH&LA’s Member Legal Advisor Jim Abrams.