Emergence of 'urban hotel fees' propels increase in surcharges

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cate _89/Shutterstock
cate _89/Shutterstock

Fees and surcharges at U.S. hotels are expected to increase 8.5% to a record $2.93 billion this year, according to an analysis from Bjorn Hanson, industry consultant and adjunct professor at the New York University School of Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism.

The forecast follows a record $2.7 billion in fees and surcharges in 2017. This year's projected climb is driven by a 2.5% increase in occupied hotel rooms, plus additional fee and surcharge categories.

Hanson detailed the emergence of urban hotel fees in his recent report about 2019 corporate rate negotiations. These fees, he said, are similar to resort fees and are now common in major cities, averaging between $20 and $40 per day. 

"The practices for disclosure are evolving, different than for most resorts charging resort fees," the report stated. "Sometimes these are shown as part of the 'total' cost of occupancy to a guest rather than as a specific extra charge."

Urban resort fees -- which can can cover goods and services like Internet, bottled water and newspapers -- account for the largest share of this year's fee and surcharge increase, despite the industry's adoption of harsher cancellation penalties. 

In 2017, a number of hoteliers -- including Marriott International, Hilton and Hyatt -- put in place 48-hour to 72-hour cancellation penalties. Enforcement of these penalties varies by market and hotel, Hanson said. 

Though U.S. hotel fees and surcharges have increased every year since 2010, recent additional fees appear to be linked to a lack of pricing power in the industry, as rate increases fail to keep pace with higher costs for hotels.

Other fees that have emerged or accelerated in recent years include charges for early check-in (most common at resorts and particularly in Las Vegas) as well as fees for unattended surface parking in suburban locations and for holding checked luggage.

Hanson expects 2019 will mark another record year for fees and surcharges, with the largest percentage increase to come from service and amenities fees, i.e., urban hotel fees. The report is based on discussions with lodging industry executives and corporate travel executives, analysis of industry financial data, press releases and information available on hotel and brand websites.
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Source: Business Travel News

 

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