Are Hotels Charging Too Many Fees? Not Really

Many a word has been written about the relentless march of airline fees, and not too many have been complementary (well, except those ones by the airlines themselves in reference to increased profits).  Heck, Southwest has made a multi-year marketing campaign out of airline fees.  Bags fly free!  No change fees!  Good stuff.

So, what about the hotel industry?  Are they charging you more fees?  This piece by Joe Sharkey of the New York Times would lead you to believe that’s the case.

And, he’s wrong.  Quoting from his article:

Fee revenue has more than doubled in the last 10 years, as many hotels, especially convention, resort and luxury ones, add charges to the bill for services like the use of a business center or an Internet connection, and in some cases apply so-called resort fees that essentially are surcharges for using the hotel’s facilities.        

It’s a good thing we started with the part I can agree with him on.  Unfortunately, it’s the one piece of the “fees” I think he under-represents, resort fees.  But, more on that later.

And as I noted last week when I checked into the Hilton Bayfront Hotel in San Diego, the clerk asked me if I wanted to pay an extra $20 for a room with a better view. Not paying it got me a 19th-floor room by the elevators with a view of the maritime docks where trucks were unloading a banana boat. (This, actually, turned out to be interesting to watch, and I avoided the $20 surcharge.)      

Nothing here strikes me as “steadily gaining revenue from adding charges to the basic room rate” as the article suggests.  Hotels have been charging extra for better views, different room types, etc for as long as I’ve been on this planet, probably a lot longer.  That’s essentially the hallmark of Las Vegas, slip the reservation agent a tip so you can get a better room.  But, I don’t view asking a guest if they want to pay more for a better room as a “fee”.  That just sounds like good revenue management to me.

The hotel also charged $13.95 for basic Internet service and $19.95 for faster-speed service, which is not uncommon for higher-price hotels. In the business center, the charge for using a computer was $6.95 for each 15 minutes, an impressive $27.80 an hour.

Hotels have been charging for internet for a loooong time.  And yet, many major chains now offer internet free to a large percentage of their elite loyalty members.  Hyatt offers it to all Platinum and Diamond members.  Starwood Preferred Guest offers it to all Platinum members and all Gold members can choose this as an amenity each stay.  Both Hyatt Platinum and Starwood Gold can be achieved through the respective credit card each program has, so I would guess that the total number of people paying for internet has probably gone down, not up.  It’s possible that more people have technology needs overall with hotel occupancy increasing at the same time.  But, the ubiquity of all-you-can-eat data plans means some of those folks will just use their smartphone or tablet.

Similarly, I would think that overall usage of computers in hotel business centers has gone down.  But, if you needed to use a computer in a business center, it’s been pretty standard for a long time that you’re going to get charged.  That seems pretty reasonable and doesn’t seem like a new fee.

On my bill at checkout, in addition to the basic nightly room rate of $260 and $27.50 in taxes, there was a daily charge of $5.20 listed as SD TMD Assessment. The city treasurer’s office describes that as a fee “to promote events and tourism in San Diego” that is levied specifically on hotels, which have the option of passing it on.    

So, this is essentially a travel and tourism tax he’s describing.  A local government, in this case San Diego, decided that they wanted to create a new tax on travel to help fund some sort of expense.  This is very common as well.  Lots of jurisdictions see tourism dollars as a big boon to their local economy.  And, adding a small assessment to each hotel room seems like an easy way to fill the coffers.  After all, a lot of those rooms will be paid for by business people who ultimately get reimbursed for their stays.  Saying the hotel has “the option of passing it on” is like saying cigarette manufacturers have the option of passing on tobacco taxes that, in some cases, exceed the base cost of the pack of cigarettes.  Why would a hotel choose to pay extra tax that was really intended for the traveling guest?

The article does bring up two things that are a bit more atypical and could be considered nuisance fees.

Hey, don’t get me started. While attending a conference at a resort hotel in Phoenix two years ago, I was amazed to find a $12 charge for porterage — bellhop service, even though, like many of you, I always wheel my own bags.

 Incidentally, when I checked out a day earlier than originally planned, I was told the “early departure fee” was $75. I protested, and the front-desk clerk checked with a manager and dropped that charge “as a one-time courtesy.”        

The only time I’ve run into porterage fees is when a hotel had a union contract that required them to charge this fee.  I don’t see these fees very often anymore, but I could understand the annoyance factor here.  But, not common IMO.

I can also understand why an early departure fee can be seen as annoying.  But, look at it from the hotel’s point of view.  If you agreed to book a room for 3 nights at $100 a night, they’ve agreed to hold that room for you.  They might have been able to sell that room for more money to someone else, maybe not.  But, you’ve got a contract for 3 nights at that rate.  If you leave early, they may not be able to sell that room last-minute and pass up revenue that they otherwise were expecting.  Conversely, would you be happy if the hotel decided to cancel the last night of your reservation because they found someone else that would pay more for the room you reserved?

The only item that the article didn’t cover in more detail that I think should have been more detailed were resort fees.  Resort fees are these charges that hotels tack on to each day’s base rate that can be $20-$50 a night ($20-$30 is a more common range).  They used to be only seen at resort properties, places like the Caribbean and such.  But, they’ve spread to cities like Las Vegas and other fun destinations.  There’s not a whole lot of rhyme or reason to these fees.  Think of them more like “fuel surcharges” from the airlines.  They don’t really move down when the price of fuel goes down.  And, resort fees don’t really correlate to exact expenses, just an easy way for the hotel to charge a few more dollars without including it in the base rate.

Now, if someone wanted to write an article about resort fees and how to improve disclosure (or banish them forever) I’m all ears.

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