Hoteliers across the United States are enjoying more than record-breaking occupancy rates. As leisure guests, business travelers and conference attendees fill hotel rooms, they’re handing over an increasing amount of money for fees and surcharges. According to a new report from New York University’s Jonathan M. Tisch Center for Hospitality and Tourism, the hotel industry is on track to collect $2.55 billion in fees and surcharges in 2016. If the prediction proves to be accurate, it will set a new record for add-on earnings for the industry.
Since 2009, fees and surcharges in the hotel industry have continued to climb, setting a new record year after year. Over the past year, though, guests have been hit with a wave of new fees. One of the most prominent is a fee for early check-in. While guests used to be able to get into their rooms prior to the scheduled check-in time for free, more properties are asking guests to fork over some extra cash for the perk. In 2016, more guests are also paying for the right to guarantee one of the most important pieces of the room: what type of bed — king or queen — they’ll sleep in for the night.
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Getting Creative With Extra Charges
Most major brands have listened to guest demands for free standard Wi-Fi access. However, some properties are still bundling connectivity into additional charges. When I was browsing for a room in New York for an upcoming conference, one boutique property’s low nightly rate caught my attention. Upon further review, I realized that the initial price tag did not include an “Urban Fee.” The $25 per night charge included unlimited use of the fitness center, unlimited local and domestic long distance calls and unlimited WiFi.
Some lawmakers have argued that fees like these should be included in the actual room rate. However, Bjorn Hanson, PhD, Clinical Professor at the Jonathan M. Tisch Center for Hospitality and Tourism, says there are a number of reasons why they are separate. “The higher room rate would be subject the fee amount to municipal occupancy taxes; room rates change frequently and are closely monitored by many travelers but resort and other fees and surcharges change less frequently; and the focus of many travelers is on the room rate,” Hanson wrote in a release that accompanied the 2016 fee forecast.
Individual leisure guests and business travelers aren’t the only ones forking over money for additional fees. Hanson highlighted that some hotels are charging additional money for bartenders and other staff at events and set-up and breakdown of meeting rooms. Administrative fees for master folio billing are also becoming more common.
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While the record-breaking fee forecast may seem like the hotel business is getting even more profitable, some external factors may cause challenges in the future. Check out “Economic Uncertainty Is Hampering Hoteliers” to learn more.