Top guest disincentives: High fees and taxes

The anemic economic expansion continues to keep room rate  growth around the world largely flaccid at best with some jurisdictions like Florida even offering steep discounts. What ought to translate in to great bargains for consumers has been thwarted if not negated by upticks in jurisdictional taxes and (in some cases) high hotel fees. The latter is a less than subtle attempt at recouping lost RevPar. Both create tremendous customer ill will and arguably long term damage to the reputation of destinations and hostelries.

The steep increases in occupancy tax was highlighted in a recent Forbes article entitled "This Summer's Travel Tax Traps" which lists travel related taxes that have been levied on a range of activities from campsites to car rentals and hotels besides the all too familiar and never ending increase in airline baggage fees. The article notes that Florida has gone a step further than most and levied an occupancy tax not just on hotel rooms but also on timeshare. The Mercury News also reports on a number of jurisdictions in California from San Mateo to South San Francisco.raising occupancy tax by 2%. Baltimore MD increased its tax by a whopping and arguably crippling 33% from 7.5% to 10%.

While jurisdictional taxes are out of a hotelier's control in most instances, "additional" fees are not. And there is little respite for hotel guests in this area particularly in up-market hotels which seem intent on inflicting maximum damage to their reputation in a bid to lift sagging bottom lines. Travel and Leisure magazine documents some of these apparently extortionate "fees" in a recent report appropriately headlined "World's most outrageous fees". The  phenomenon is almost as old as the industry as the article notes that "the October 6, 1904, edition of The Daily Star in Fredericksburg, VA, published a list of unscrupulous lodging fees, mainly in
Europe, that included fees for towels, nightshirts, heat, hot water,
horse stabling (whether the guest brought a horse or not), and, in one
hotel, a one-penny fee for each ascent and descent in the hotel

Europe has not gotten any less cheeky or extortionate as was experienced last week while staying at an airport hotel in Heathrow when a "toll-free" call to the US resulted in a £2 charge per call. Internet usage is either an absurdly high £5 per hour or £15 per day! A slightly creative way around the hotels' extortion is to download a mobile wi-fi app like Joikuspot on to one's cell phone, thereby, creating a "hotspot" for internet use.

The fact that US hotels tend towards disclosure does not make it any less painful considering that most business travelers need to use the internet but at least it does not come as an unwelcome surprise on the folio. However, here too, somehow hotels think it unimportant to mention the $1-2 charge for toll free calls in their warning list ignoring the fact that a surprising number of guests continue to prefer to use a "land-line" even in the cell phone age for reasons ranging from audio quality to health concerns.

There is no immediate relief in sight per the experts from PKF Hospitality Research as "2010 will still be a very soft year for the
lodging industry. Revenues probably won't return to pre-recession levels
until at least 2012. For now, hotels need to keep their rates low to be
competitive, but they also need to add on as many surcharges as
possible to be profitable." The industry seems intent on adopting an M&M store strategy where the candy (room rate) is relatively cheap but just about anything else purchased in-store will leave the wallet severely depleted. The difference is that the so-called "extras" like internet use are almost as essential as the bed the guest sleeps on.

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.