Hotels to reap record $2.93 billion in fees
That’s an 8.5% jump from 2017, and the figure will rise again in 2019, a hospitality expert predicts.
Hotels will bring in a record $2.93 billion this year in extra charges beyond the basic room rate for things that many travelers still expect to get free.
That total, which represents an 8.5% increase from 2017, comes from Bjorn Hanson, an adjunct professor at New York University School of Professional Studies and a hospitality expert who has been tracking hotel fees for years. He predicts such charges will continue to rise in 2019 to help hotel operators keep up with higher payroll and real estate costs.
“Fees and surcharges are highly profitable,” Hanson said in an annual assessment of hotel industry fees. As much as 90% of many charges go straight to the bottom line, he said.
In the airline industry, which began imposing new charges as the recession deepened in 2008, fees have generated a great deal of passenger anger, although charges for things such as checking luggage or changing reservations have helped air carriers overcome rising jet fuel and payroll costs.
The hospitality industry discovered the magic of fees around 1997 when hotels needed to compensate for higher energy costs, Hanson said.
To generate new revenue, hotels and airlines prefer to add fees or increase existing ones rather than raise prices so as not to scare off customers who primarily consider base airfares and overnight rates when planning a trip.
Among the relatively new fees imposed at resort hotels in the last two years are charges for early checkin, which is most common in resort areas such as Las Vegas, Hanson said.
Resort fees — ranging from $20 to $40 — have also become more common in urban hotels that aren’t generally considered resorts. In the past, resort fees have been associated with gyms or pools, but now resort fees are more often charged to pay for free bottled water, breakfast and newspapers, he said.
More hotels are likely to adopt them because customers aren’t complaining, he said.
“Anecdotal reports are that these charges at urban hotels are receiving limited guest resistance,” Hanson said.
Hilton’s new small, hip Motto concept
The latest hotel brand by Hilton was introduced with a string of well-worn cliches: “a fresh approach to modern travel culture” and “a micro-hotel with an urban vibe.”
The new brand, dubbed Motto, will offer rooms with an average footprint of 163 square feet that can be linked with other rooms so that families or friends can share a common living room. Bunk beds and wall beds will be a common feature.
The rooms are expected to be stylish with technology to let guests control the lights, TV and temperature with a smartphone app. The nightly cost has yet to be announced, but Hilton promises “competitive rates” and the ability for a group of guests to split the bill.
Micro-hotels are becoming more common. Pod Hotels, Yotels and other lodging with Mini-Me sized rooms have been popping up around the country to appeal to young travelers who want a comfortable, affordable place to sleep but don’t want to share a room with a stranger, as they might in a hostel.
Hilton’s announcement represents the latest move by a major U.S. hospitality giant into the micro or compact hotel segment.
Marriott International introduced its Moxy brand in the U.S. in 2016, with hotels trying to appeal to millennials with small rooms, high-tech gadgets and large common areas in the lobby.
Hilton says the first Motto hotel is set to open in 2020 in London with projects in “various stages of development” in locations including San Diego, Boston and Washington, D.C.
“With Motto by Hilton, we are bringing to market something the industry has never experienced with its flexibility and affordable room product, desirable locations and guest-empowered service,” Hilton Chief Executive Christopher Nassetta said in a statement.
Southwest nears Hawaii service
Southwest Airlines, the nation’s most popular domestic carrier, plans to begin selling tickets to Hawaii as soon as the end of this year, with flights taking off next year.
That was one of the takeaways from a conference call between executives of the Dallas-based airline and analysts during a discussion of third-quarter earnings.
During the Thursday call, analysts were eager to get details about the timing of ticket sales to the Aloha State by the low-cost carrier. For good reason: The more competition on a route, the lower airfares will drop.
“Our goal continues still to be to sell tickets at the end of this year and operate flights early next year,” said Michael G. Van de Ven, chief operating officer at Southwest Airlines.
The delay has to do with a certificate needed from the Federal Aviation Administration called ETOPS, which stands for Extendedrange Twin-engine Operational Performance Standards. Planes that are ETOPS certified are tested to operate safely for extended periods of time — at least 60 minutes — away from an airfield or airport even after an engine failure. Flights from California to Hawaii can take up to six hours.
Van de Ven said the review process began about 12 months ago, when Southwest Airlines announced its plans to fly to Hawaii, and the FAA process typically takes between 12 and 18 months to complete.
Southwest Airlines has said that it plans to fly to four airports in Hawaii from Oakland Metropolitan Airport, San Diego International Airport, Mineta San Jose International Airport and Sacramento International Airport. Flights from Los Angeles International Airport may be added later, airline officials said.