US Lodging Industry Expected to Break Record in Fees and Surcharges
After collecting a record $2.35 billion in total fees and surcharges, the U.S. lodging industry is expected to collect even more in 2015, according to a report from the NYU School of Professional Studies.
According to the report, the U.S. lodging industry is projected to land about $2.47 billion in fees and surcharges, based on selected interviews with industry executives and corporate travel executives, analysis of industry financial data, press releases, and information available on hotel and brand websites.
Part of that total is due to a projected 3 percent increase in occupancy, but the report also notes that hotels are charging more for fees and surcharges and have even added new categories of charges.
Fees and surcharges, which became a common industry practice around 1997, are numerous these days, especially after hotels began including energy surcharges in 2000. Per the report, common fees and surcharges include (take a breath first): “resort or amenity fees, early departure fees, reservation cancellation fees, Internet fees, telephone call surcharges, some 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, and baggage holding fees for guests leaving luggage with bell staff after checking out of a hotel but before departure, and charges for unattended parking.”
Groups are also being charged for bartenders and additional staff at events, the setup and breakdown of meeting spaces and administrative fees for master folio billing.
But, beyond all of those charges, some properties (especially resorts) are now charging for early check-in. In some properties, the guarantee of a specific room type and the holding of checked luggage can also tack a bit on the total bill.
According to the report, fees and surcharges have jumped every year except for a couple times following 2001 and 2008 when demand had declined (as recently as 2009, the industry collected $1.55 billion in fees and surcharges). And it’s hard to justify the fees and surcharges when you consider many fees and surcharges have a profitability of 80 to 90 percent.
The good news is that hotels have generally been more transparent when it comes to revealing fees and surcharges to guests, but it’s also important for guests to remember that fees and surcharges are generally established by each individual property, not across an entire brand.
Some have wondered whether it’s better to include fees and surcharges in the overall room rate, but according to the report, a higher room rate would also come with additional municipal occupancy taxes. Plus, suddenly featuring a higher room rate may give guests the impression that the hotel is raising the room rate itself, potentially causing a drop in demand or poor reviews.
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