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Canadian Travel Press
Issue Date: May 27, 2019
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What agents need to know about hotel fees and surcharges

ERIC BARBER

Over the last few years, there has been a growing trend right across many segments of the travel industry – including airline, hotel and rental cars – of additional fees being charged that are not included with the original price of the airline seat, hotel room or rental car.

Airlines have become the best known for this, stripping down some fares to the bare minimum and charging for blocking a seat assignment, checking bags, having a carry-on, food, drinks, etc.

But the hotel industry has also been doing this quite extensively, as well, and, in many cases, has made itself newsworthy, often for the wrong reasons, with a number of different charges being added to guest folios upon checkout. In 2017, this was estimated to be worth an additional $2.7 billion dollars in the US alone.

Arguably, the most common surcharge is the ubiquitous “Resort Fee” which is typically explained as access to the pool, gym facility, beach, etc. and is charged per room or per person on a daily basis on top of the room rate.

For the purposes or this article, a search of a three- night stay in Las Vegas showed that Bally’s would charge C$406 for double occupancy for a three-day stay in May, with a daily resort fee of $68.23 to be collected daily directly by the hotel, which comes to an additional $204.69 on top of the room rate, which is slightly more than a 50% surcharge.

At the Marriott Marquis in New York City, there’s a “US$30 Destination Fee” added to the cost of the room daily which can be used as a Food & Beverage credit and includes “Enhanced Internet” and one tour.

Interestingly, some resorts are now charging for reserved chaise lounges in pool and beach areas that would be supplementary to the resort fees being charged at the property.

The question is ‘Why?’
Agents and their guests may ask why this is not included in the original room charge and why they would have to pay this in addition to their room rate. This is an excellent question. Corporate travellers might ask why they have to pay this daily fee in New York and have a tour included when they have no need for such
a service.

Another common charge travellers may be faced with is some sort of destination market fee, essentially a fee levied on travellers that is used to assist the destination in marketing itself to various segments and raise awareness. Most of these charges are legislated by a local government or mandated by a local destination management office, but, in some cases, these are arbitrarily collected by hotels without any governmental or official oversight. Clearly guests and their agents booking on their behalf should be concerned with additional costs that can be accrued in addition to the room and taxes.

Airlines implemented fuel surcharges years ago to offset the increasing cost of jet fuel and added this as a line item to their ticket costs and hotels were not far behind in charging energy surcharges on top of room rates. Again, customers could argue that this should be built in to the cost of the air ticket or the room rate for hotels, and they don’t wish to see a mini line item budget added to their hotel or air ticket charges.

There have been class action law suits against hotel companies previously for not disclosing fees at the time of booking. Companies continued to charge the fees but disclose them at the time of reservation. In some jurisdictions, it is mandated that all fees and taxes be included in the total cost of booking. But presently, there is no universal law or even rule of thumb that applies everywhere.

A new opportunity
Hoteliers, as with most segments in the travel industry, are competing in very saturated markets with heavy competition and have been under pressure to advertise low rates to attract customers. The fees were a way offset rising costs such as often volatile energy prices, but also to create additional revenue streams, in the case of facility or resort fees, on top of the advertised room rates.

For agencies, this creates a service opportunity for their client base to deliver them the ultimate best value, by making sure clients are receiving the best deal overall, with all fees and levies taken into consideration. For many consumers, this is a very confusing situation, and agents will be able to provide a valuable service by guiding them to the right properties at the best total price.

Additionally, agents should ensure that clients understand that these are not commission centres for agents and that they have no financial interest in the fees, other than provision of the best hotel with the best pricing conditions.

With this challenge in the marketplace, this is simply an opportunity for agents to demonstrate the value that they provide to clients rather than booking independently and ending up with pricing that they had not anticipated.

Eric Barber is the senior director, national sales for Realstar Hospitality, and he contributes a monthly column to Canadian Travel Press that offers an insider’s look at the hotel industry.

 

 

 

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