PAYING THE PRICE
“Urban destination fees” and “resort fees” are on the rise across the US as hotels try to boost flagging profits
Beware the trend for resort and destination fees
America’s 45th president, Donald Trump, is reported to be the most active golfer among recent inhabitants of the West Wing – playing golf for roughly one-quarter of his time in office. Trump owns at least 17 golf courses around the world, including Trump Turnberry in Ayrshire, Scotland, with its famous Ailsa Open Championship course rated the UK’s best in the 2018 rankings by Golf Monthly. Trump Turnberry, with its refurbished hotel, well-equipped facilities and two playing courses, following the opening of the “King Robert the Bruce” 18 holes last summer, is also considered a top meetings and incentive destination. The resort is marketed under Marriott International’s Luxury Collection brand of upscale independent hotels.
Yet, recently, Trump Turnberry was alleged by The Independent to be the first British hotel to introduce a practice found in many US hotels of imposing a mandatory charge (often called a “resort fee”) for “extra” services. These typically cover such amenities as wifi, use of the swimming pool and fitness facilities, and in-room coffee or bottled water. Turnberry’s “resort fee” was said to be a mandatory £20 a night on top of its room rates.
Pricing rules in Scotland, the rest of the UK and the EU require a hotel’s quoted rates to include all obligatory taxes and charges. The Independent’s travel writer Simon Calder, who broke the story, said he believed the additional charge was now being included in the room rate, although the hotel had “declined to answer any questions about the fee”.
Perhaps we should not have been surprised about the introduction of a fee – Trump hotel management has already successfully imposed a mandatory US$35 per night resort fee at its glitzy Trump International Hotel in Las Vegas. Unlike in the UK and European Union, there is no regulation in the US that prohibits “hidden” charges.
Vegas, with its giant casinos and extravagant hotel architecture, is viewed as the birthplace of mandatory resort fees, where they date back as far as the late 1990s. A novelty then, research from the resortfeechecker.com website suggests there are now more than 1,000 US-based hotels that impose a mandatory resort fee, averaging US$21 a night.
This resort fee covers mostly leisure amenities that the guest may or may not use, but which they are obliged to pay for. However, US hotels are also adding surcharges in other areas, according to New York University’s Tisch Centre for Hospitality and Tourism, which has been monitoring such extra fees for the past two decades.
New surcharges it has identified include early check-in and early departure fees, as well as charges for using the business centre, mini-bar restocking and leaving luggage with concierge staff.
The Tisch Centre’s Professor Bjorn Hanson says that among other new fees being levied is “charging for unattended surface parking in suburban hotel locations. For groups, there have been new or increased charges for bartenders and other staff at events, along with special charges for set-up and breakdown of meeting rooms, as well as administrative fees for master folio billing.”
He also noted the hotel industry “has become stricter about cancellation of reservations, with fees for cancelling within two days of arrival being the most common, although it can be three days.” Last year, major chains including Marriott, Hilton and Intercontinental Hotels Group all imposed strict new policies on cancellation to avoid having unsold rooms at the last moment.
As the airline industry so egregiously discovered some years ago, there is nothing that was previously understood by travellers to be included in the airfare that now cannot be levied in extra fees and surcharges.
The Tisch Centre calculates that total hotel fees and surcharges in the US amounted to a record US$2.7bn last year – an increase of five per cent on 2016. Hanson points out that “many fees and surcharges are highly profitable, with incremental profitability of between 80 to 90 per cent or more of the amounts collected.”
But he also notes that 2017 “was the first year we saw a decline in internet access fees”, possibly due to more travellers in hotel loyalty schemes receiving free online access during their stay. Moreover, hoteliers’ efforts to charge a fee for guaranteeing a particular room type (such as a junior suite) have not been so successful, given the potential for guest dissatisfaction if the room required is not immediately available due to the logistics of preparing rooms for fresh occupancy.
Yet Hanson does credit US hoteliers for being more upfront than expected about levying fees and surcharges, rather than trying to hide them as is often
Turnberry’s resort fee was said to be a mandatory £20 a night on top of its room rates
Reports began emerging that some Manhattan hotels were imposing “urban destination fees”
claimed. “Disclosures on websites, confirmation emails, room service menus, ‘tent’ cards in guest rooms, and directories continues to increase,” he says.
Suggestions that fees are “hidden” or “surprise” may be due to the fact that “the categories being charged are often established and the amounts set hotel-by-hotel, rather than by brand – and both can change frequently.”
Yet there is also a problem, Hanson believes, of guests failing to pay “reasonable attention” to the disclosure of fees when booking. He points out that this is understandable as the “focus of many travellers is on the room rate and getting the best deal” rather than locating extra charges which may not be immediately obvious.
Regulatory intervention may, however, offer some hope for travellers to the US who feel they have been unjustly charged. As far back as 2012, the US Federal Trade Commission warned some 22 hotel companies about their disclosure of resort fees and they are still interested in the issue, according to Hanson. “Despite recent statements by industry executives to the contrary, the FTC is currently focused on resort fees,” he says.
In the UK, the Competition and Markets Authority – which investigates allegations of anti-competitive behaviour by businesses – is currently probing online hotel booking websites. In particular, it says it is looking at “the extent to which sites include all costs in the price they first show customers or whether people are later faced with unexpected fees.” An interim report is expected this summer and, if past investigations are any guide, could lead to action to increase the transparency of added-on fees.
Yet it is in New York where the game has moved on from traditional leisure resorts imposing fees to mainstream city centre hotels taking centre stage. Over the past year reports began emerging from travellers to the Big Apple that some upscale hotels in Manhattan were imposing “urban destination fees” (sometimes just called “urban charges”) on guests for every night stayed.
Typically the fee is $25 a night per room. This or similar fees are understood to be charged by Manhattan hotels such as the New York Hilton Midtown, the Westin New York at Times Square, and four of Marriott’s Manhattan properties (although these were initially described as being part of a “test”). And like their counterparts in Vegas and elsewhere, they are mandatory fees not included in the published room rate. Times Square hotels are particularly likely to impose an urban charge, reasoning that it is one of the city’s most popular tourist and entertainment destinations. The exact number of Manhattan hotels charging urban fees is believed to have surged from some 15 in spring 2016 to just under 80 in March this year, according to some online observers, although the Tisch Centre’s Hanson thinks there are only about
30. Transparency in charging is not a watchword in this hospitality market.
But he said he was “surprised at the limited resistance to this new category of fee” by travellers, although not fazed that the major chains had introduced them. While New York’s hotel occupancy levels last year were the highest since the mid-1980s, room rates only increased broadly in line with the rate of inflation, forcing hotels to look elsewhere for extra revenue sources.
So far, however, it appears that UK and Continental hotel groups have not followed their American cousins, due in large part to the stricter legal regulations covering advertised hotel prices in the UK and EU, where quoted room rates must include all obligatory taxes and charges. Corporate travel management companies are aware of the potential problem. “At the moment it is not an issue in Europe at all as such fees have not been introduced to European corporate hotels,” explains Rebecca Lee, Hotel Supplier Relations Manager at FCM Travel Solutions. “For the few corporate hotels we’ve had this issue with in the US, we’ve managed to negotiate the resort fee out. The charge simply doesn’t work for business travellers; if the benefits are not actually a benefit to the business traveller then they should not be made mandatory.”
She adds: “The travel manager will encourage their travellers to book those chains that do not charge urban (destination) fees.” But for as long as the leading hotel chains sense another lucrative income stream, urban fees seem likely to remain for some time – until the next bright idea for surcharging travellers is dreamt up. Until then, President Trump will have to hope that eye-watering green fees of up to £500 a day on Turnberry’s Ailsa course can help keep the books balanced now that his hotel has had to drop its resort fees.
The greens at Trump’s Turnberry resort
ABOVE: New York urban destination fees can be sky high