Take the Bite Out of Hotel Fees

It's not your imagination: Hotel fees and surcharges really are multiplying. As of the end of July, PricewaterhouseCoopers (www.pwcglobal.com) had identified 15 areas in which hotels are instituting fees or raising prices for the first time. And, according to Bjorn Hanson, a lodging consultant for the New York City — based consulting firm, every month the list grows longer. The dollar amount is adding up as well: of the $23 billion in profits hotel companies have generated over the past two years, more than $1 billion resulted from fees, charges, and price increases for services.

“It started with mandatory gratuities for groups, and the percentages for those have increased. Now there are fees for just about anything,” says Mark McCulley, president of Los Angeles — based Mark of Excellence Meetings and Events, a full-service planning firm serving the association market.

Particularly egregious, say planners polled for this article, are fees for things like baggage handling (whether used or not), daily in-room safe fees (again, whether used or not), bottled water on the nightstand that looks like an amenity but will show up on the bill at $4, and pool service/towel fees charged to groups with no time to use the pool. “What's next,” says one outraged planner on the Meeting Industry Mall listserv (www.mim.com), “pay per flush?”

Just Say When…

Hotel occupancies have been declining since 1996, and it doesn't look like the immediate future will be any rosier. In May, PricewaterhouseCoopers predicted that revenue per available room would increase by 2.8 percent this year and 4.3 percent in 2002. In July, it revised the forecast to a decrease in revPAR of 0.3 percent this year, with only a 2.3 percent rise for next year. “This will actually cause hotels to become more aggressive in finding alternatives for revenues and profits,” says Hanson. “Since they can't raise the contracted room rate, the fees serve as a kind of pseudo rate increase.”

Growing awareness of — and umbrage about — these fees began with the energy surcharges that first popped up in California this spring. These were instituted to help offset that state's high energy costs, but soon spread across the country. “Prior to the arrival of the energy surcharges on the West coast, I hadn't really focused on the problem,” says Stephen Alter, meetings manager, American Symphony Orchestra League, New York City.

Energy surcharge lawsuits soon followed, with class-action suits being filed in San Francisco and Los Angeles against Hilton, Hyatt, Marriott, and Starwood in May. In June, the Florida Attorney General's office launched an investigation into the practice at Florida hotels. Several weeks later, a class-action lawsuit against the Wyndham International chain was filed in Miami. “I think the door will open to broader suits as well,” says Hanson.

Alter says he was able to get energy surcharges dropped at his annual event in Seattle. “Now I hear attendees complain about the unexpected charges that accompany their hotel bills, be it the $3 energy surcharge, the outrageous package/message delivery charges, or even the fees for use of the pool and health club,” says Alter. He has begun to include a “hidden charges” clause in all his organization's contracts to make sure fees and charges are disclosed up front and, if possible, negotiated away.

The Hotel Perspective

Roger Conner, vice president of communications with Marriott International, Washington, D.C., wouldn't comment specifically on the proliferation of fees and charges for services because, he says, “I don't have an official overview on [fees and charges] within Marriott. I'm sure some of our properties must have something along those lines, but I don't have specific knowledge of it.”

Hanson says that's pretty typical. “None of the hotel chains have uniformly endorsed or implemented those fees, so you can't say Hyatt has charges for this, Marriott doesn't. Some Hyatts do, and some Marriotts do.” He cautions that, even if you've negotiated a contract on a national level, the local hotel still may have fees the national sales rep wasn't aware of.

Kathy Shepard, vice president, corporate communications with Hilton Hotels Corp. in Beverly Hills, Calif., says Hilton's corporate hotels don't impose any fees without disclosing them first. “We have a sign on the in-room safe that explains that there is a charge for using it, and another on the coffeepot saying that the coffee is provided at no charge,” she says. While she couldn't speak for Hilton's franchise hotels, she says the worst you can expect at a corporate Hilton will be spa fees and “those outrageous phone bills.” But the spa fee is stated up front, she says, and “everyone uses their cellphones these days instead of the hotel phone anyway, don't they?”

Cover Yourself in the Contract

To protect attendees from unpleasant surprises, ask about any extra fees in advance and state in the contract that any fees not listed in the contract will not be paid, says Jed Mandel, a partner in the Chicago — based law firm of Neal, Gerber & Eisenberg. If the contract has already been signed, confront the hotel about the fees, going up the ranks if need be, or even file a lawsuit.

“Planners need to make sure all fees are disclosed ahead of time, and that the hotel has the authority to impose the charge,” Mandel says. “If hotels experience enough pushback, you'll start to see them put in a provision that says the meeting planner will have to agree to whatever surcharges exist at the time of their meeting,” he says. “Put it in the contract that the decision will be made closer to the date, just like you'd do for room rates.”