Hotel fees are on the rise. And they’re likely to keep going up.
Rising occupancy rates have prompted hotels to collect more fees, primarily because more guests equal more monies collected, but also because properties have tried introducing new charges. Though they’ve been around for years, meeting planners and attendees still get sticker shock when they see these unexpected costs, with costs tied to everything from setting up meeting rooms and bellman service to delivering packages and master folio billing.
This year, U.S. hotels expected to collect an estimated $1.8 billion fees and surcharges from guests, an increase of nearly six percent over last year, according to a new study conducted by Bjorn Hanson, divisional dean, clinical professor, of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at NYU School of Continuing and Professional Studies.
An increase in occupancy was what brought in most of the additional fees, Hanson notes, and numbers are expected to spike next year. “Occupancy has been 60 percent, so the industry has been reluctant to add a lot more fees this year, but they have launched some, and next year as occupancy increases we’ll likely see more new fees introduced, and at higher amounts.”
UNWELCOME SURPRISE
Some of these fees surprise even seasoned meeting planners, who struggle with finding the best ways to deal with them.
“We’re seeing more and more hotels charging a plug-in fee. If you use any electrical units in a hotel meeting room, you’re going to be charged,” says Joan Eisenstodt, chief strategist of Eisenstodt Associates in Washington, D.C. “I get it--the cost of energy is going up. But at the same time, am I going to start seeing charges for glasses of water at meals? I think we are because of water shortages. It’s being done already in Atlanta.”
The electricity plug-in fee is just one of many new charges that planners are encountering. “I now have to budget for the maid service, the bellman, a reset room fee, things I never saw before,” says Maha Hermes, manager, medical conferences and events for Questcor Pharmaceuticals in Hayward, Calif. “The hotels are getting booked so they can ask for these things. But [the fees] can add up to $20 more per day for each room. I wish they’d just include it in the room charge, so we don’t have to see it.”
PRICE OF OUTSOURCING
One sticky fee issue is the increased charges for services that are now outsourced, such as business centers. “I stay at Mandalay Bay every year, where they outsource to FedEx, and I get charged to receive things, to have them delivered to my room and to ship them out again, even though I have my preprinted Fedex labels,” says Eisenstodt. Evidently the hotel cannot negotiate any of its costs for these services, said Eisenstodt, who is thinking of negotiating directly with FedEx.
Industry attorney John Foster, senior partner at Foster, Jensen & Gulley in Atlanta, found another solution – go outside the hotel. “There are always business centers right down the street in cities, and you can always go to another place to do things (like copies, faxing or shipping),” he says. “It’s all a matter of whether you want to pay for the convenience.”
While outsourced services may not be negotiable, most other things are, depending on the negotiating skill of the planner and the value of the group, says Hanson. “Realize that each group has a different value, based on its size and the timing of the event. There are times when non-negotiable fees and charges may become negotiable, if the group is valuable enough to the hotel. The more informed the planner is about what services are provided from in-house service and what’s outsourced, the more the planner can facilitate negotiations,” Bjorn says.
Eisenstodt suggests planners become more assertive in their questioning of hotel salespeople, so nothing gets overlooked. “Even with an extensive RFP, finding out all of the fees is tough. It’s partly up to the meeting planner to ask the questions, and the hotel to disclose the fees.
“Planners must ask, ‘What do you charge for that might surprise me?’,” she continues. “Ask questions that are beyond the obvious, and ask the sales department to delve into it if they’re not sure.”
And Eisenstodt offered up a research tool. “I go to TripAdvisor and get info from individual consumers that might trigger me to ask about various things.”
Once the fees are revealed, it’s time for some creative negotiating. “You got to give to get,” says Hermes. “You’ll never get them all removed, but you might get some of them removed or lowered,” says Hermes. “Figure out things beforehand when you’re negotiating. The hotels don’t like to budge on the rooms, since that’s their bread and butter, but you can negotiate on audio-visual and setup fees. There is more room to play in that area.”
KNOW THYSELF
Planners need to find out all the hotel policies that might affect their attendees and then negotiate them. “If I know my group and that people are going to arrive earlier than the 3 p.m. check-in, I have to decide what we can negotiate,” says Eisenstodt.
Once negotiations are completed, Foster includes a clause in his contracts to protect planners from additional charges. “It says neither the group nor the individual members are responsible for any additional fees not named in this contract or later agreed to,” he says. “If the hotel clerk says ‘if you want to check in you have to agree to this $15 surcharge,’ and the guest ought be able to say, ‘I don't want do it.’”
SERVICE AT A PRICE
Although hotels may be charging more fees these days and--as Hanson’s study shows--there’s a continuous rise in revenue from fees, hotelier’s say the spike is simply due to occupancy spikes, rather than any sort of purposeful fee-for-all.
“At the end of the day, it's the average daily rate and F&B that’s the largest driver of profit for a hotel; not the ancillary fees,” contends Michael Dominguez, vice president, global sales for LowesHotels and Resorts.
“There’s a misperception that we’re driving up ancillary fees but we’re just driving ancillary fees to cover ancillary expenses. The cost of us providing some services that are now expected are increasing dramatically,” he says.
For example, Dominguez notes, “Everyone expects wireless to be free, but it costs us a tremendous amount of money not just to run it, but to have staff available to assist the needs of guests using that service.”
“That’s the biggest difference between us and Starbucks,” he notes. “People complain, always asking why they get free wireless at Starbucks but can’t get it at a hotel. But hotels require larger bandwidths, and Starbucks can’t help you when it doesn’t work.”
Judy Jacobs is a Northern California-based freelance writer who has been writing about the travel industry for more than 25 years.
