Are Hotel Service Fees a Thing of the Past? Not Likely
What is the Hotel Service Fee at the end of the bill? Pool, shoeshine, WiFi, city-mandated charges?
Travelers have been paying subsidiary fees for more than a decade now when staying at hotels. All the while balking at the “mandatory” charges for services that normally would be included in hotel stays. A recent Wall Street Journal article describes the obtuse fees as Resort Fees, Destination Fees, and even City Mandatory Facility Fees, somehow making them seem like a government tax or regulatory mandate. However, the tables may be turning on hotel companies, big and small, with a bipartisan bill introduced in September of last year in the House of Representatives. The bill, called the Hotel Advertising Transparency Act (HATA), looks to create clarity in hotel pricing for consumers. But are these efforts enough to do away with a practice that nets the hotel industry close to $1 billion annually?
Besides the seemingly deceptive nature of these “drip fees”, where a firm discloses the initial rate and then introduces additional charges throughout the buying process, there are other implications for the consumer. For starters, hotels benefit from reservation networks when their published rates are lower than their competitors. According to the Wall Street Journal report and similar research done by the L.A. Times, the rate disparity helps boost the listing location on these massive search engines. When a hotel advertises a rate lower than the actual final cost would be, they can climb to the top of a search. Take for example the Tropicana Las Vegas and Hampton Inn Las Vegas Suites South, both Hilton properties. Their published rates are quite similar and thus appear close in searches for accommodations in the city. However, the Tropicana charges a daily destination fee that is not included in the listed rate.
According to a lawsuit filed by Nebraska attorney general
against Hilton, similar to one filed by the District of Columbia against Marriott, the fees are not displayed where the consumer can objectively compare them against competing hotels. In some cases, the suit details, the fees are listed on inconspicuous parts of the booking process or worse not listed at all and notices
only allude to charges being levied at the property.
More recently reservation networks have begun to penalize hotels that charge these fees regardless of how transparent they may be. Expedia and Booking.com have both taken steps to post hotels further down their lists to level the rate
discrepancies in line with other listings.
A more pertinent consequence to local governments of these elusive fees is the tax evasion side effect. When hotels list these revenues separately, they are not responsible for the hospitality taxes most municipalities levy on the industry. These taxes are used to shore up infrastructure around tourism of the specific region including supporting Destination Marketing Organizations (DMO). Without this vital financial support, marketing efforts and tourism campaigns, that ultimately benefit the whole of the tourism industry, are left underfunded. DMO’s depend on this funding within the budgets of municipalities that may otherwise consider decreasing tax burdens on their residents.
Hotel companies nevertheless are not shuttering the practice under this mounting pressure. Arne Sorenson, CEO of Marriott International, concedes that the issue is a “tough one” but adds that the fees “are not going away.” Similarly, Hilton released a statement that states “less than 2% of the hotels charge hotel fees and they are detailed in the booking process for every hotel.” Further frustrating consumers and fueling the ongoing legal action is the reasoning behind these fees. Following the lead of the airline industry in charging baggage fees, hotel companies justify the additional charges by offering services a la carte. The difference is the fact that these services are added under a mandatory premise and for essentials that most travelers consider to be part of a hotel stay. Some hotels, for example, explain the fee to include the use of the pool, shoeshine services and in an egregious case the use of the gym. Unlike baggage fees, however, the charges are added to the final bill regardless of whether a guest utilizes the benefits or not.
The New York Times reports this once pesky nuance to traveling has a face and a website. Lauren Wolfe, an attorney that founded KillResortFees.com is looking to advocate against these deceptive charges in all 50 states. Primarily, the site looks to publicize the existence of Hotel Service Fees and open a dialogue for consumers to get a clear understanding of the practice. She encourages consumers to reach their state attorney general in part because most states have been investigating these fees for a few years now. The interest by state justice departments comes as no surprise since the practice inevitably costs taxpayers and local municipalities financial support for services benefitting the tourism industry.
The legislation, however, does not look to abolish the mandatory fees or their supposed benefits. Instead, it mirrors an agreement reached between the European Commission and Airbnb last year. Endorsed by Eddie Bernice Johnson (D., Texas.) and Jeff Fortenberry (R., Neb.), the bill looks for full transparency in listing the fees during the booking process. This law would alleviate the need to scrounge a hotel website looking for the fine print but could do little to curb the incentive of generating additional revenue for hotels. On the contrary, with a set of regulations in place, it’s possible more properties will add “Resort Fees” to their bottom line.