Jul 09, 2023

Hotel service fees can be hidden by confusing lingo

Book a hotel room at a certain rate per night, and that’s the rate a traveler expects to pay at checkout. Added taxes are a given. What isn’t expected are the mysterious extra charges tacked on to that base price.

Those charges can go by many names; service fees, resort fees, amenity fees, destination fees and facility fees are the more common ones. In addition, WiFi, bottled water, hotel shuttle service, newspaper delivery, fitness center access, food-and-beverage credits and other conveniences may be included in the charge. But these extra fees haven’t typically shown up in the hotel rate when a room is booked online.

That has pushed consumers, the Federal Trade Commission and even President Biden to call for more transparency around and/or elimination of what the White House lumps under “junk fees.”

But putting all of these fees under the same umbrella isn't necessarily accurate.

“Don’t confuse resort fees and destination fees with service fees,” said Leora Lanz, assistant dean at Boston University School of Hospitality Administration. Service fees are separate and are meant to apply to housekeeping, luggage handling, and other services that typically are rewarded with a gratuity. Some hotels are adding these automatically, especially for room block bookings during conferences and events.

Resort, amenity, destination and urban fees, on the other hand, show up at higher-end, full-service hotels that offer perks like a spa, golf course, water sports, pool chairs, bike rentals and similar extras. In the case of city hotels, they might include free wine and cheese at happy hour or a yoga class in the fitness center.

According to Chip Rogers, president and CEO of the American Hotel and Lodging Association (AHLA), an industry trade group, only 6% of hotels nationwide charge a mandatory resort/destination/amenity fee, at an average of $26 a night.

A manager at one upscale hotel chain, who prefers to remain anonymous, said that some of their locations have resort fees and urban fees, but others don’t. Depending on the property, the fees can range from $35 to $50 and will include some sort of in-room dining (room service) credit that guests can use throughout their stay. At resorts, sometimes this fee may go towards complimentary canoe or kayak rentals, complimentary bike or golf club rental, excursions within the resort, etc.

Morning Consult conducted a survey on behalf of the AHLA and found that 80% of consumers are willing to pay for hotels with resort fees if the amenities are worthwhile.

“Value is key,” agrees Lanz. She cited the example of a Boston hotel that she believes “does it well.”

The Commonwealth Hotel charges a $40 urban destination fee, but guests receive unlimited coffee at a craft coffee bar, unlimited free snacks in the lobby, access to the fitness center, and 10% off at the on-premise, chef-driven restaurant. On the other hand, when she and her family vacationed at a hotel in Hawaii, they were charged a resort fee that included a surf lesson on the beach (which they didn’t use) but didn’t include the $75 daily charge for an umbrella and chair.

In March, President Biden championed the Junk Fee Prevention Act introduced in Congress, which is designed to broaden government regulation over hotels, travel agencies and online ticketing services to “clearly and conspicuously display” the total price of their services.

Consumers have filed lawsuits charging that they book online without knowing about a resort fee because it doesn’t appear until the very last page on the hotel’s website.

“The surprise is what people are objecting to,” said Lynda Dias, assistant professor in the department of hospitality management at New York City College of Technology.

While the legislation remains pending in Congress, hotel brands under the Marriott umbrella, which includes Sheraton, Westin, JW Marriott, St. Regis and a number of others, are starting to put all fees right on top so you see the total price of a room right away, said Dias. Marriott changed its disclosure policy in accordance with guidance from the FTC and after a lawsuit in Pennsylvania.

“You no longer have to wait for checkout to see all the fees you’ll be paying,” she added.

It’s still not clear where these fees go. Consumers want to know, but hotels are not always eager to reveal it. And guests also object to paying fees for amenities they don’t use.

According to AHLA’s Rogers, “resort, destination and amenity fees directly support hotel operations—including wages and benefits for hotel staff.”

But Marriott and other brands still have local lawsuits pending and may not be as transparent as they say. In June, guests staying at Marriott’s Los Angeles-area hotels sued the chain over a “hotel worker-protection surcharge” averaging $10-$14 per night. The fee supposedly covers security devices like panic buttons that protect employees against potential assaults by guests. But the class-action lawsuit claims that the charge goes beyond what is needed for that protection.

Four years ago, the District of Columbia sued Marriott for “deceptive” resort fees. Just this month, Marriott accused D.C. of ignoring court orders by failing to provide evidence in the suit, urging a judge to bar the imposition of civil penalties on the hotel chain, according to Law360.

“Hotels are revenue-driven, and it’s a challenge to manage it all,” said Dias. “Taxes are going up, labor is going up and the added fees allow them to have a cushion.” In some states and municipalities, separately charged amenities are not taxed the same as the room rate, providing hotels with more profit.

Third-party online bookings are also cutting into the profit margin, as hotels have to pay high commissions to these companies, said Dias. In the end, the added fees contribute to the cost of doing business.

Individual guests have had some success negotiating the removal or reduction of service and resort fees at checkout, but meeting planners and tour companies booking groups into hotel blocks can write it into the contract ahead of time.

“Hotels will oftentimes add an automatic charge for Housekeeping Gratuities and Porterage Fees to a room block. You can negotiate these fees to ‘be at the discretion of the attendee’ and you can usually negotiate a resort fee to a mutually agreed upon number,” meeting planners for Restaurant Business’ parent company, Winsight, reported. “Alternatively, the hotel can increase the rate that the attendee sees to include the resort fee.”

The bottom line: Hotels are adding fees to boost revenue, but if the fees don’t provide value, guests are increasingly vocal about protesting. As room rates continue to rise, guests have to be extra-aware of the sometimes nebulous language that can mask added fees.

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