In 2003, hotels collected $1 billion in fees and surcharges. That’s projected to nearly double this year, up to $1.95 billion, a new record, according to research conducted by Bjorn Hanson, Ph.D., divisional dean of the NYU-SCPS Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management, at the NYU School of Continuing and Professional Studies.
The increase reflects a combination of 3.5 percent more occupied hotel rooms than in 2011, plus higher fees and surcharge amounts at many hotels, especially resorts. Fewer hotels will have newly introduced fees and surcharges.
The $1.85 billion collected in 2011 also set a record, with that increase attributed to increases in the amounts charged, the introduction of fees and surcharges for some hotels, and an increase in the number of occupied rooms of almost five percent.
For groups, there have been increased charges for bartenders and other staff at events; special charges for setup and breakdown of meeting rooms; fees for master folio billing; and baggage holding fees for guests leaving luggage with bellstaff after checking out of a hotel but before departure.
Fees and surcharges emerged as an industry practice in about 1997 with resort fees (one of the first resort fees was titled “amenities tariff”). Energy surcharges were introduced for a short period in 2000. Fees and surcharges have increased every year except for periods following 2001 and 2008 when lodging demand declined.
Interestingly, Hanson notes, although the lodging industry initiated fees and surcharges before the airline industry, the airline industry collects significantly more than the lodging industry.
Examples of fees and surcharges:
• Resort or amenity fees
• Early departure fees
• Early reservation cancellation fees
• Internet fees
• Telephone call surcharges
• Business center fees (i.e. charges for receiving faxes and sending/receiving overnight packages)
• Room service delivery surcharges
• Mini-bar restocking fees
• Charges for in-room safes
• Automatic gratuities and surcharges
Most fees and surcharges have incremental profitability of 80 to 90 percent or more.
Bjorn Hanson is a hospitality and travel researcher, widely known for having created econometric models that transformed business analysis in the field. Prior to joining NYU-SCPS, he held the position of global industry leader, hospitality and leisure, at PricewaterhouseCoopers LLP.