Some NYC Hotels Turn to Urban Destination Fees

Ask any traveler about their least favorite part of visiting Las Vegas and inevitably the term “resort fee” will show up somewhere on their list.

For years, Las Vegas’ top hotels have been charging up to $25 per night—and sometimes more—on top of the per-night room fee.

What this fee includes varies, but it often incorporates some combination of daily newspaper, Wi-Fi login, fitness center access and valet parking. Make no mistake, though, if you aren’t using these services, the fee is not optional.

So what happens if you don’t operate a resort?

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In the case of New York City, hotels have found the perfect solution with the introduction of “urban destination fees,” which are similarly hovering around $25 per night on top of the regular room rate.

In many cases, the fee also includes extras like free local telephone calls, an F&B credit and Wi-Fi, but in other cases, it is strictly an add-on to reflect “the hotels’ proximity to a ‘tourist attraction,’” reports The Independent.

A spokesperson for Marriott Hotels and Resorts told The Independent, “The Destination Fee was created as a way to lift the guest experience by providing added value to a hotel stay. Each hotel may offer a combination of hotel services (such as dry-cleaning, pressing or a food & beverage credit); local experience vouchers for free/discounted events and attractions (such as city tours), and/or access to fitness programs (such as yoga or cycling) in nearby studios.”

“All participating hotels will include enhanced internet, as well as local, long distance and international phone calls.”

“The implementation of the Destination Fee gives us the opportunity to test how a bundle of benefits that our research shows are valuable to guests might enhance the stay.”

Similarly, a Hilton representative confirmed with the British publication that two properties are charging an urban destination fee for “amenities and services that we believe enhance the guest experience.”.

Travel expert Gary Leff, who first reported the story about the New York fees, called it “the dumbest hotel fee I’ve ever seen.”

Charging extra fees, of course, has been a money-making bonanza for the airline industry.

For 2017, airlines are expected to rake in nearly $83 billion in extra fees, an increase of more than 264 percent since 2010. These add-on fees have proven to be so powerful, they have helped transform an industry that once consistently operated on the verge of bankruptcy into one that for a brief period was a shiny darling of Wall Street.

READ MORE: Caesars, MGM Raise Resort Fees at Las Vegas Hotels

For years hotels have been paying attention to how airlines implement these fees, and now it looks like more hoteliers are jumping into the fray.

In the early part of 2017, the Federal Trade Commission released a study stating consumers paid about $2 billion in resort fees in 2015, a number that reflected a 35 percent increase over the previous year. What’s more, states the report, some seven percent of all hoteliers in the U.S. charged a hotel fee in 2015.

Hotel Management’s estimates for these fees are even higher.

Citing research from the Jonathon M. Tisch Center for Hospitality and Tourism at the NYU School of Professional Studies, it says hotels earned $2.6 billion from fees in 2016, a number that is predicted to top $2.7 billion for 2017.

While the FTC study, penned by the Bureau of Economics, concluded that “consumers are likely being harmed by the hotel industry practice of disclosing mandatory resort fees separate from posted room rates, without first disclosing the total price,” it also seems improbable that these fees will disappear anytime soon.

Hoteliers benefit from charging fees, as opposed to listing the amount in the per night reservation, in several ways.

For one, add-on fees make rooms look less expensive when listed alongside comparable properties via online travel agencies.

More importantly, at a time when online travel agencies are squeezing hotels with commissions upwards of 25 percent per booking, hotel fees serve as an end run around those commissions, meaning straight-up extra cash in the hoteliers’ pockets.

While many hotels attempt to distance themselves from OTAs, in particular with marketing campaigns that encourage direct bookings, these efforts haven’t proven to be wholly successful, leaving hoteliers looking for other ways to boost their profits.

READ MORE: Hotel Fees, Surcharges Forecast to Reach Record $2.55 Billion in 2016

In 2012, the FTC took action, by warning 22 hotels that resort fees were not “adequately disclosed” on hotel reservation websites, and that “such practices may violate the law by misrepresenting the price consumers expected to pay for their hotel rooms.”

The FTC asserts that the letters have led to “improvements in resort fee disclosures since 2012,” but also admits that “complaints about the fees persist.” It is also unclear if the FTC has continued to contact hoteliers it believes to be in violation of its policies.

What is clear is that, similar to the airlines, hotel fees are here to stay. Travelers, especially those on a strict budget, would be wise to start getting in the habit of confirming extra fees with their hotels before they travel.

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