Some New York hotels tacking on 'destination fees'

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Photo Credit: Dibrova/Shutterstock

At least 16 higher-end New York hotels have quietly begun imposing a mandatory $25 nightly "destination fee."

Hotel operators say the fees cover additional services and amenities, but some guests are complaining they are hidden and unwelcome costs.

Last August, Marriott International started what it called a pilot program, charging the fee at 13 hotels, including the New York Marriott Marquis, Sheraton New York Times Square, Westin New York Grand Central Station and JW Marriott Essex House.

Hilton began its destination-fee program at the New York Hilton Midtown and the Doubletree by Hilton Times Square, while Hyatt instituted the fee at the Grand Hyatt New York.

In each case, the fees are subject to both local and occupancy taxes.

Marriott, Hilton and Hyatt say the fees cover upgraded WiFi, on-property food and beverage credits, phone service and either free or discounted local activities, such as audio tours.

"As Marriott continuously seeks new ways to provide our guests the best experiences and value, we have been testing a destination fee at some of our hotels in New York City," said company spokeswoman Kathleen Duffy. She estimated the daily "a la carte" value of the amenities to be $100.

"We're definitely listening closely to our guests to understand their feedback," a Hilton spokesperson said.

Judging by recent reviews on TripAdvisor, however, some of that feedback has been negative. In one review, a Sheraton New York Times Square guest called the fee "absurd," while a New York Hilton Midtown guest wrote on TripAdvisor that he was "ripped off." A Grand Hyatt New York reviewer complained that the fee was "not disclosed."

Consumer advocates and some public officials have been warning about rising resort fees in markets such as Las Vegas and Orlando, and about other allegedly "hidden" fees.

U.S. hotel and resort guests were projected to have been charged a record $2.7 billion in extra fees last year, up about 4% from 2016 and almost double the 2005 total, according to a study released last September by Bjorn Hanson, clinical professor at New York University's Jonathan M. Tisch Center for Hospitality and Tourism.

As a result, Sen. Claire McCaskill (D-Mo.) in early 2016 proposed a bill mandating that hotels include resort fees and all other mandatory charges in the published room rate.

It appears that New York hotels are looking for ways to boost revenue in a city where daily rates haven't risen much in recent years. With extensive hotel development, the city has struggled to absorb new supply. Manhattan had about 66,000 hotel rooms in 2008, according to hotel consulting firm HVS. Today, Manhattan has about 115,000 rooms.

While New York's average daily rate of $256 last year was the country's highest, it was up just $5 from five years earlier, according to hotel research company STR.

Hanson said there could be as many as 30 New York hotels that have either instituted destination fees or have made plans to do so. TripAdvisor reviews notwithstanding, he said he was "surprised at the limited resistance to this new category of fee."

Given the low-key response, he expects the practice to widen not only in New York but in other pricey U.S. destinations.

"Occupancy in 2017 was the highest since 1984, yet rates increased only at the rate of inflation, so the industry is looking for revenue sources," Hanson said.

Hotel Association of NYC spokeswoman Lisa Linden said, "We are not involved in the setting of such fees, and we encourage our members to be transparent regarding all fees their guests are charged."

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