Ancillary charges: What’s left out in “all-in” pricing

The onset of the summer travel season usually brings out a spate of articles that seek to inform consumers of the best deals and "traps" to avoid. A bete-noire of travel writers but often a favorite of companies, big and small, is "add-on" fees that usually are all but hidden from unwary consumers.  An article in Marketwatch suggests "eight ways to fight hidden fees".  

The column begins with ostensible good news on the government front saying that "the U.S. Department of Transportation just proposed cracking down on many of the dreaded airline surcharges for checked bags, carry-ons and advance seat assignments, starting sometime next year" but quickly goes on to note that "isn’t trying to do away with these fees; it simply wants airlines and third-party travel sites like Expedia and Travelocity to fully disclose the fees when passengers buy their tickets."

As a money-spinner, excess baggage fees generated over $3bn last year with another $2.8bn for the particularly aggravating "change fees". So it's unlikely to go away anytime soon. Nevertheless,  few rub salt in passenger wounds as effectively as Ryanair where there is almost never an opportunity to change flights; what's worse Ryanair often changes flight timings with nary a thought for connecting flights from other airlines, which also often are non-refundable and with change fees, passengers may have to contend with. 

Hospitality has sought to emulate airlines in this regard with the high probability of earning customers' ire in equal measure on what regulators term "drip fees". Marketwatch notes that many resorts have resumed adding “resort fees” to bills with some going so far as charge for a safe that’s in the room whether or not it is used.  Other "surcharges" include  housekeeping fees, concierge charges, energy-use fees, wi-fi costs, luggage-storage fees for storing bags before rooms are ready or for keeping after checking out and a "mandatory" $10 bellman tip fee.

 Given the foregoing, a recent article on Havard University's blog  by a pricing consultant with a headline "Adding Fees That Consumers Won't Hate" seems like a non-sequitur. It recaps the recent settlement of a class action lawsuit by Ticketmaster which heretofore had broken down its pricing based on admission to an event and then "tack on additional charges such as convenience, facility, order-processing, and delivery fees to purchases.

The suit had claimed these fees were misleading as consumers were unaware that the company was making money on them. The consultant points out that consumers evaluate "prices sequentially" on their merits and if they judge add-ons as excessive are unlikely to buy. It is a point that hotels and resorts should take note of with regard to the spate of fees that has attracted the attention of travel experts but yet to catch the regulator's eye. 

 

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.

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