SHERIDAN, WYOMING – Mar. 6, 2025 – Over the past few years, hoteliers have faced an increasingly complex regulatory environment. In November, the industry won a significant victory when a federal court struck down a Department of Labor (DOL) rule that threatened to dramatically increase overtime costs for small businesses. The ruling, which followed a lawsuit filed by the American Hotel & Lodging Association (AHLA) and other business groups, is a major relief for small businesses across the country, particularly as operating costs continue to rise for America’s hoteliers. While this ruling is certainly a win, it’s important to understand how the overtime rule would have impacted not just hotel owners, but also the employees who rely on career advancement within the industry.
The Overtime Rule: A Costly Mandate for Hotels
The DOL’s proposed changes to overtime rules would have required hotels to pay overtime wages to salaried employees earning up to $58,656 annually—up from the previous threshold of $35,568. This increase, which was set to take effect in January, represented a nearly 65 percent jump in the overtime salary threshold, an adjustment that likely would have forced hotels to reclassify many salaried employees as hourly workers. AHLA was supportive of the DOL’s first-phase increase to $43,888, but the larger shift could have been catastrophic for the hospitality industry, eliminating mid-level positions and drastically increasing labor costs.
In many hotels, mid-level managers and employees have opportunities to grow and advance, moving from entry-level positions to leadership roles. However, the DOL’s proposed rule would have placed a significant financial burden on small businesses, forcing them to cut these opportunities for advancement. Reclassifying employees from salaried to hourly would have stripped away career flexibility and benefits, such as healthcare and retirement plans, and potentially eliminated many jobs entirely.
AHLA, along with numerous other business groups, argued that this drastic change would hurt employees more than it would help them. A letter sent to lawmakers in 2024 highlighted concerns that salaried employees would lose their workplace status, benefits, and opportunities for career growth. Fortunately, these potential consequences were averted when a federal court invalidated the rule and reset the overtime threshold. This decision ensures that hoteliers can continue to provide meaningful career opportunities and competitive compensation without the added financial burden of a blanket overtime rule.
Investing in People: Hotel Wages and Benefits
The hospitality industry is known for promoting from within and providing opportunities for career advancement. The lodging industry, in particular, often enables employees to move from entry-level roles to higher paying positions with greater responsibilities. AHLA’s efforts to fight the overtime rule align with the broader goal of fostering growth within the hospitality industry, not just protecting the bottom line of businesses.
In fact, hotel wages are at an all-time high for the first 10 months of 2024. Since the pandemic, hotel wages have increased more than 10 percent faster than the average wage increase across the broader economy. Hotels have also expanded benefits, offering flexible working hours, sign-on bonuses, retention bonuses, and access to hotel amenities and discounted stays to attract and retain talent. These efforts reflect hoteliers’ commitment to ensuring that hospitality remains a viable and attractive career choice.
FTC Fee-Disclosure Rule: Ensuring Transparency for Consumers
Alongside the victory in the overtime rule case, another significant development has occurred in the hospitality industry. The Federal Trade Commission (FTC) recently announced a new fee-disclosure rule that will impact how lodging establishments display mandatory fees, such as resort, destination, cleaning, or amenity fees. For years, AHLA has advocated for a nationwide standard requiring the entire lodging ecosystem, including short-term rentals, online travel agencies, metasearch sites, and hotels, to clearly disclose all fees upfront, and the new FTC rule aligns with this vision.
This new regulation ensures that all mandatory fees are clearly displayed at the time of booking, eliminating surprises and enabling consumers to make more informed decisions when comparing prices. By standardizing fee disclosure across the lodging industry, the FTC’s rule will improve transparency and simplify the booking experience for consumers, as well as level the playing field for hoteliers.
With the FTC’s rule in place, hotels, along with the rest of the lodging ecosystem, will be required to display these fees upfront, ensuring that guests know exactly what they will be paying for their stay. This move is expected to build consumer confidence and create a more straightforward, competitive pricing structure in the hospitality industry.
The Road Ahead for Hoteliers and Consumers
The changes to overtime rules and the FTC’s new fee-disclosure rule represent important steps forward for the hotel industry. The overtime ruling ensures that hotels can continue offering career opportunities while keeping labor costs manageable, and the FTC’s new regulations will enhance the guest experience by ensuring pricing transparency. Both changes reflect the industry’s commitment to fair practices for employees and consumers alike.
The hospitality industry, with its focus on people, whether they are employees or guests, continues to navigate a challenging regulatory environment. AHLA’s advocacy ensures that hotels can maintain a balance between meeting financial obligations and offering meaningful career opportunities while delivering exceptional experiences for guests. With these regulatory victories, the future of the hotel industry remains bright, with hoteliers continuing to lead by example in both employment practices and customer service.
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