PAY­ING THE PRICE

“Ur­ban des­ti­na­tion fees” and “re­sort fees” are on the rise across the US as ho­tels try to boost flag­ging prof­its

Business Traveller - - CONTENTS - WORDS DAVID CHURCHILL

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

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