[Legal Spotlight] (9) Strengthened Price Display for Lodging Businesses... Business Suspension Even for a Single Violation

Stronger dispositions for failing to post a rate table or overcharging
Prices posted online, such as on OTAs, are also subject to management

Amid a surge in lodging reservations for the summer vacation season, the price-management responsibility of lodging businesses has also become heavier. As the government has drastically strengthened the obligation to display lodging rates in order to eradicate so-called "rip-off pricing," from now on, failing to post a rate table or charging more than the posted amount can result in a business suspension disposition on just a first violation.

Attorney Kim Dae-su of the law firm Daeryun explained that the core of the recently implemented revision of the Enforcement Rule of the Public Health Control Act is not "price control" but "strengthening the obligation to display and manage prices." Rather than how much the actual price is set at, what has become important is whether the amount the consumer confirmed matches the actual payment amount, and whether a management system to prove this is in place.

Under the revised rules, implemented on the 14th, the level of administrative disposition for failing to post a lodging rate table or overcharging beyond the posted rate has risen significantly compared to before. A first violation is a 5-day business suspension, a second 10 days, a third 20 days, and a fourth can result in an order to close the business. In particular, the management targets include not only the internal rate table of the lodging business but also prices posted on its homepage and online travel platforms (OTAs).

The problem that can most frequently arise in the field is a mismatch between the online price and the actual payment amount. Disputes can also arise when price information between the OTA and the lodging's property management system (PMS) is not linked immediately, or when price changes are reflected late.

Cases in which additional costs—such as peak-season special rates, extra-person fees, cleaning fees, and pet fees—are not disclosed so that consumers can easily confirm them at the reservation stage may also be subject to administrative disposition. In the end, rather than the price increase itself, whether the consumer was sufficiently informed of the exact rate and additional costs at the time of reservation becomes the important criterion for judgment.

If subjected to an administrative disposition, accounting through objective materials is most important. A business suspension is carried out after prior notification and an opportunity to submit opinions under the Administrative Procedure Act, and in this process, one must prove the posted price and actual payment amount, the timing of price changes, and whether the consumer was notified.

Even after a disposition, if the facts were wrongly recognized or there was a procedural problem, one can contest it through an administrative appeal or administrative litigation, and if significant damage to peak-season business is expected, one can also consider applying for a stay of execution.

Attorney Kim advised that recording the price-management process itself is key to responding to future disputes. OTA price-change logs, homepage edit histories, reservation confirmations, card approval records, consumer notice screens, and price-change approval records can all serve as important evidence, and he explained that if one wants to claim a system error, objective materials such as fault logs or records of consultations with the platform must necessarily back it up.

As the first thing a lodging business should check ahead of the peak season, he cited whether the rates posted on-site, on the homepage, and on OTAs match. Peak-season special rates and various additional costs should be clearly disclosed at the reservation stage, and the price-change history should be systematically managed. He also emphasized the need to build an internal management system, such as unifying staff response standards and designating a person responsible for price management.

Attorney Kim Dae-su said, "This system is not meant to regulate the prices of lodging businesses, but to strengthen the management system so that transactions are carried out at the price the consumer confirmed," adding, "Rather than pricing policy, having a price-management system and compliance in place will be the key competitive edge in lodging business operations going forward."

Reporter Jung Ye-jin yejin0311@inews24.com

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[Legal Spotlight] (9) Strengthened Price Display for Lodging Businesses... Business Suspension Even for a Single Violation (Go to link)