Hotels and resorts raking in on surcharges and hidden fees

The practice by some hotels and resorts of imposing surcharges and fees not disclosed until check-out time has come under scrutiny.

In 2001, Wyndham Hotels came under fire after Florida state employees complained that automatic surcharges were being charged on their travel vouchers without their knowledge.  An investigation led to a lawsuit that addressed undisclosed automatic surcharges that were improperly imposed by hotels run by the Wyndham Corporation.  A few months back, the state of Florida reached a US$2.3 million settlement with Wyndham Hotels.

The settlement provides for consumer restitution and requires that the hotels change their business practices. The settlement requires numerous hotels in Florida and nationwide to fully disclose any automatic charges to guests, when hotel rates are being quoted.

It also requires third parties, such as Orbitz, Travelocity and other online sites that sell hotel rooms, to disclose charges and fees at the time of the reservation. For some hotels this is not an easy and profitable solution, as evidenced by InterContinental Hotels Group. In 2005, the company began listing total price at booking.  Ultimately, however, InterContinental Hotels had to change its policy after it found that disclosing the total price resulted a high abandonment rate.

In recent years, hotels and resorts have taken a profitable lesson from the banking industry.  According to PriceWaterHouseCooper’s Hospitality Division, surcharges and hidden fees have produced revenues of US$1.6 billion in 2006. This was a 7 percent increase over the previous year. Four years ago, the industry generated US$550 million in surcharges and fees. This means revenue have almost tripled since 2003. It has been estimated that a 7 percent increase for 2007 could bring in nearly US$2 billion in hidden fees and surcharges.

The increase in surcharges and hidden fee revenue coincides with the fact that more travelers are turning to online travel sites.  According to PriceWaterhouseCooper, the average daily rates from hotel rooms booked online increased by a higher rate than did the overall industry average.  

Industry experts say that the hospitality industry started charging surcharges and fees to recoup losses suffered after 9/11.  The industry has since recovered which begs the question: Why is it continuing to charge fees and surcharges that only become apparent at check-out time?  For most travelers, check out is not the time to dispute surprise fees and surcharges.  They have rental cars to be returned, flights to be caught, and, sometimes, the added stress of traveling with small children. 

“I would prefer that the industry use transparent pricing practices that would enhance customer satisfaction,” Frank Haas, current Hawaii Tourism Authority’s vice president of marketing, told eTN.  “Customers should know what they are paying for. This would help the hotel industry avoid a portal of loss and create positive environment for future business.”

Here are some of the surcharges and fees you may be faced with at check out time:
early check in fee
early check out fee
shuttle service fee
baggage-holding fee
housekeeping fee
mini bar deposit
mini bar restocking fee
ice and bottled water charges
room service surcharge
room service delivery fee
bartender charge
meet/eat fees
room block fees
cancellation fees    
guaranteed date fees (for groups)
in-room safe surcharge
room set/re-set charges
internet service
phone service
fax service
business center
fitness room
golf club transfer fee
resort amenity fees
pet fees
tourism promotion fees
energy surcharge

Hotel surcharges and fees have become so ubiquitous that it is now a focal point in travel advertisements.  A few major hotels and resorts out rightly point out on their website that they do not charge “hidden fees or costs.”  “Many online travel sites charge extra fees for online bookings, we do not,” some hotels claim.