Following the 2013 record of $2.1 billion, total fees and surcharges collected by U.S. hotels will increase to another record level of $2.25 billion in 2014, according to a trend analysis report by Bjorn Hanson, clinical professor with the NYU School of Professional Studies Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management.
The increase for 2014 reflects a combination of approximately 3.5 percent more occupied hotel rooms than in 2013, more fees and surcharges, and higher amounts charged at many hotels for a total increase of approximately 6 percent.
Fees and surcharges emerged as a common industry practice in 1997. Another phase for fees and surcharges was when energy surcharges were introduced in 2000.
Examples of fees and surcharges include: resort or amenity fees, early departure fees, early reservation cancellation fees, internet fees, telephone call surcharges, business center fees (including charges for receiving faxes and sending/receiving overnight packages), room service delivery surcharges, mini-bar restocking fees, charges for in-room safes, automatic gratuities and surcharges, baggage holding fees for guests leaving luggage with bell staff after checking out of a hotel but before departure, and charges for unattended parking. For groups there have been increased charges for bartenders and other staff at events, special charges for set-up and breakdown of meeting rooms, and fees for master folio billing.
“I think hotels are doing as good a job as they can—almost—with being transparent about fees and surcharges,” Hanson told Lodging. “There really aren’t any secret or hidden fees in surcharges. That doesn’t mean some guests aren’t surprised. It is an environment in which guests need to perform a little bit more due diligence, just way they do these days for airlines and car rentals.”
Hanson does not foresee that the increases in fees and surcharges will lead to a decline in guest satisfaction. “Guests are focused so much, in general, on rate. Part of this is to keep rates low, and I think many travelers understand that. A $2 difference in a posted room rate shifts market share, so that’s one of the reasons why items are not included in the room rate that otherwise might be.”
U.S. lodging industry fees and surcharges have increased every year except for brief periods following 2001 and 2008 when lodging demand declined.
Fees and surcharges are highly profitable; most have incremental profitability of 80 to 90 percent or more of the amounts collected.