October 18, 2017

Room Pricing in Emergency Situations

SACRAMENTO, CA –  In response to the wildfires devastating the state, President Trump and Governor Brown have declared a state of emergency in California. With thousands of displaced residents needing shelter, CHLA urges properties to be educated on the obligations of the state’s anti-price gouging statute, Penal Code Section 396. 

Under Section 396, for 30 days after a disaster emergency is declared, it is unlawful for a property to sell or offer a hotel room for a price more than 10 percent above the price charged immediately prior to the declaration.

During many 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.

Violators of Section 396 are subject to criminal prosecution that can result in a one-year imprisonment in county jail and/or a fine of up to $10,000.  Violators are also subject to civil enforcement actions including civil penalties of up to $5,000 per violation, injunctive relief and mandatory restitution.

CHLA Partners