RESORT AND AMENITIES FEES, telephone surcharges, minibar restocking charges, automatic gratuities — the list of add-on fees that appear in the fine print of a hotelgets longer by the minute.
“I just had a new one last week,” says Gerri Ayers, president of Ayers Meetings & Events Inc., Houston. “It was a ‘passing’ fee to cover the cost of banquet staff passing the drinks on trays to guests. This was in addition to the standard bartender fees and the 20 percent gratuity added to the $5.50 per drink cost.”
Keeping track of all these extra fees can be a challenge. It's a lot like buying a car — you have to read the fine print.
New Revenue Stream
As a result of the fees, hotels have seen some pretty unhappy customers lately. In fact, Wyndham International Inc., Hilton Hotels Corp., Hyatt Corp., Marriott International Inc., and Starwood Hotels & Resorts Worldwide Inc. have all recently settled class-action lawsuits that alleged fees were not disclosed in advance, according to American City Business Journals Inc.
But that hasn't stopped them from adding fees. Why?
According to PricewaterhouseCoopers, add-on fees will supply the hotel industry with an estimated $1.4 billion in extra revenue in 2005. “Planners should be alert to a master-folio billing charge, a bartender charge in addition to the traditional cost per bottle opened, meeting-room charges for food-and-beverage service, and housekeeping and bellhop automatic gratuities and service charges,” says Bjorn Hanson, PhD, head of Pricewaterhouse Coopers' Hospitality & Leisure Practice division. (See box on page 26 for a more complete list of potential add-on fees.)
So, rather than do away with profitable add-on fees, the chains are being more careful to disclose them before striking a deal with a customer. Take Hilton, for example, which recently instituted a companywide pricing policy that all mandatory prices must be disclosed at time of purchase (when a reservation is made), while optional prices must be disclosed to customers before they are charged. “Room rates are considered mandatory pricing,” explains says Dennis Koci, senior vice president of operations support for Hilton in Beverly Hills, Calif. “Things like parking, room service, and telephone service are considered optional pricing.” According to Koci, this means a customer cannot be charged an optional fee unless he or she opts in.
Marriott also tries to maintain full disclosure with customers. “We believe in being open with our customers from the start, so they are not surprised,” says Laurie Goldstein, Marriott spokeswoman. “Marriott does not charge resort fees. But for many of our customers, we are bundling phone and Internet charges. This saves the customer money and assures that they are not surprised by a lot of fees.”
However, a fee is a fee, and in the end, fees mean higher rates for customers. “Our challenge is that as hotels have seen consumers become more accepting of these fees, they now see dollar signs and a new revenue stream,” says Steve Collins, owner of Breckenridge, Colo., meeting-planning company Resort Meeting Source LLC. “They have seized upon this as a way to raise their rates without really raising their rates.”
How to Fight Fees
Planners are not powerless in the face of add-on fees.
Take resort fees, for example. If your group is going to be in a meeting all day, explain that to your hotel salesperson and ask why you should pay the resort fee when no one will use the facilities. If the property wants your business, it will do away with the fees; if it doesn't, be prepared to take your meeting somewhere else.
Collins has successfully negotiated out resort fees. “I had one hotel implement a $5 resort fee between when it quoted rates to me and when we went to contract,” he says. “The resort fee was ‘nonnegotiable,’ but it dropped the room rate by $5. Had it not done that, we would have gone elsewhere.”
Vicki Juntti, CMP, events manager at Sagebrush Corp., Minneapolis, puts a clause in herstating that all charges must be disclosed in the contract and that no additional charges will be accepted. “That may seem too simple to be true, but it works for us.”
“Know how much the hotel wants your group,” advises Tom Blackman, CMP, director of sales andfor Seascape Resort Monterey Bay in Aptos, Calif. “If your group is valuable, then the hotel might even tolerate out-of-pocket expenses beyond discounting room rates and negotiating add-on fees.”
Blackman recalls a recent experience when a salesperson came to him and said, “I think we can get this $40,000 conference if we are willing to provide the group transportation to a local attraction.”
“We gave the group their requested transportation — a cost of $460 directly out of the resort's pocket,” he says.
The amount of leverage you have with a hotel is in direct proportion to the number of rooms you will occupy and how much money you will spend on property. “If your group is small, don't expect a large property to offer concessions, discounts, and free rooms,” Blackman says. “But, there's a property for every group, even the one that needs 5,000 square feet of space and 20 overnight guest rooms.”
What Can Hotels Add On?
- Early departure fees averaging $50
- Master-folio billing fees ranging from $50 to more than $1,000
- Resort and amenities fees ranging from $15 to $20 for towels, fitness-center access, tennis- and basketball-court access, in-room coffee and tea, daily newspaper delivery, etc.
- Long-distance telephone charges, phone surcharges on local calls longer than 20 minutes, and connection fees for toll-free calls
- High-speed Internet-access charges of approximately $9.95 for each 24-hour cycle
- Fax charges ranging from $1 to $5 per page
- Handling charges for overnight packages
- Room-service delivery fees of approximately $2.50 in addition to a 15 percent to 17.5 percent gratuity
- Minibar restocking charges up to 20 percent of prices
- Automatic gratuities or service charges for housekeepers, bellhops, and doormen
- Room charges for meeting rooms in which food and beverages are served during a meeting, in addition to meeting-room rental fees
- Open-bar reception charges
Get It in the Contract
John Foster, Esq., CHME, a lawyer with the Atlanta firm of Foster, Jensen & Gully LLC, recommends including a clause in your contract that prohibits the addition of fees without your consent. The following is an example:
“MISCELLANEOUS CHARGES/AUTHORIZED SIGNATURES:
No additional charges not specified in this contract, or any addendum, will be incurred by XYZ Group for work performed or for services or items provided by HOTEL unless HOTEL has first obtained prior written permission from an authorized representative of XYZ Group to have the work completed or the service or item provided.
Neither XYZ Group nor attendees will be responsible for additional surcharges, gratuities, or service fees not included in this contract without XYZ Group's or an attendee's written consent, respectively.”
This clause also protects planners from unexpected charges that can occur when someone without authority to consent orders something from the hotel, such as an extra projector or plate of hors d'oeuvres. With this clause in your contract, “a hotel is obligated to only take requests for items from someone representing the meeting sponsor that has the authority to make those decisions,” Foster says.