Lynne Greenberg is trying to figure out how her hotel bill got so high. After 10 nights at the Hyatt Regency Westshore in Tampa, she was presented at checkout with a three-page bill totaling more than $2,500–even though her room was $189 a night.
Leafing through the fine print of telephone charges, minibar fees and sky-high laundry expenses, Greenberg adds it all up: Incidental charges amount to almost $500–some 20 percent of the total bill.
“And this isn’t even that bad,” says Greenberg, an event planner at Major League Events in New York. “I’ve seen a lot worse.”
It’s happening throughout the lodging industry. Hurt by a drop in occupancy rates, hotels are taking a nickel-and-dime approach for add-on fees to a whole new level. They’re increasing fees or adding new charges for everything from the minibar to the telephone. Make a phone call, get a shirt cleaned or order a hamburger from room service, and odds are those items will cost more than ever. Even tipping the maid has become a mandatory item on the checkout bill at many hotels.
For travelers, the extras have become a rude wakeup call: In just a year, they’ve shot up 20 percent and now account for a third of the typical guest bill, including food and drinks, according to Smith Travel Research, a lodging-research company in Hendersonville, Tenn. But the upside for the industry couldn’t be better: Hotels are now taking in an extra $5 billion in revenue a year.
“It’s a pretty good strategy for the hotels,” says Ed Perkins, a consumer advocate for the American Society of Travel Agents. “But it’s not so good for the guests.”
After five years of record growth, the hotel business now finds itself with a glut of rooms, dragging occupancy rates below their 25-year average of 65 percent. In that environment, room rates are likely to stagnate or even drop, putting pressure on hotels to boost any extra charges they can find.
Hotel executives say the charges reflect the growing number of amenities guests expect, covering the cost of operating everything from modem hookups to laundry rooms. Still, they acknowledge the add-ons are an opportunity to bring in more money. “Certainly these areas generate quite a bit of business,” says Dieter Huckestein, president of hotel operations at Hilton Hotels Corp. “But we don’t want to get to the point where we’re charging for your pillow and the soap.”
Some hotels, though, are getting pretty close, to the chagrin of the traveling public. “It’s like they’re picking your pocket and you know it’s happening,” says Alison Gagliardi, who noticed a $70 “gratuity” charge at a Massachusetts inn recently. “It’s so common, I’m getting used it.”
Though never cheap, hotel laundry fees have hit an all-time high, and are typically three to four times more than laundry costs in the non-lodging world. That dress shirt? It may cost $1.15 at home, but at the Sheraton Seattle, expect to pay $4.50. That suit? Expect to pay at least twice the $6 you might at home; at the Omni Los Angeles, it costs $13. The costs add up–over a few days, a traveler can be hit with a cleaning bill of more than $100.
Hotels say they set their prices to be competitive with other hotels, not with the dry cleaner on the corner. Moreover, the charges include not just the cost of cleaning, but next-day service and labor costs.
Automatic gratuities, long a tradition in European hotels, have been popping up at U.S. hotels and resorts with increasing frequency. The charges range from a flat fee to an across-the-board 18 percent tariff. This past summer, Grand Bay Hotels & Resorts instituted a chainwide surcharge of between $9 and $20 a day, depending on the property.
A spokeswoman at Patriot American Hospitality Inc., which owns Grand Bay, says the fee covers tips for all personnel except room service, and the hotel doesn’t take a cut. Guests are informed of the program at check-in.
But not everyone appreciates the gesture. “It takes a lot of nerve,” says Andrew Harper, who edits the Hideaway Report, a newsletter on luxury hotels. “You have no indication whom it’s going to.”
For several years, hotels have charged access fees for local calls and 800 lines, earning the enmity of guests and the scrutiny of the Federal Communications Commission, which investigated the industry in the early 1990s for deceptive phone practices.
Now the Internet has raised the stakes. With travelers hooking up modems for hours at a stretch, hotels are charging per-minute fees for local calls. Hilton hotels, for example, charge 10 cents a minute for local calls after 30 minutes. Hotel executives say they are taking the measure because their phone systems have been overloaded. But guests are saying the same thing about their bills. A few hours on the Internet can quickly add up to $50 or more a day.
Don’t expect the high-speed access lines many hotels are installing to make using the Internet much cheaper. The new lines should prove even more lucrative for hotels, says Larry Chervenak, a hotel-technology consultant, because third-party networks actually are paying for the installation and passing a cut along to the hotels. “It doesn’t cost the hotel anything,” notes Chervenak.
And, of course, there’s the minibar–over there, by the television, filled with those oh-so-expensive goodies, such as the $3 Pepsi and the $8 jar of peanuts. After years of languishing in hotel rooms, minibars have slowly become a major source of revenue, says Karen Rubin, an industry consultant at HVS International in Mineola, N.Y. About 30 percent of hotel guests now snack from the minibar.
And they’re paying for the privilege. On top of the typical prices, the Westin Bonaventure in Los Angeles tacks a $1 daily restocking fee and an 18 percent service charge to purchases. Even so, the hotel’s minibars “barely break even,” says Scott Striffler, director of food and beverage, due to the high labor costs involved with the machines.
Which makes the cutting edge of minibar technology all the more welcome for the industry. The latest minibars have computers that alert the front desk when anything is removed, saving hotels the trouble of checking every minibar, every day. The new technology also makes it harder for guests to argue about an item, and some hotels say they’ve been able to cut their minibar staffs in half.
Room-service bills have become an exercise in add-ons. A chicken fajita from the room-service menu at the Radisson Resort in Scottsdale, Ariz., costs $11.50–and that’s just the entree. Add a $2 delivery charge, an 18 percent service charge and an optional tip on top of that, and a quick lunch becomes a $20 outlay. Such charges are becoming standard practice at full-service hotels.
Hotels say they aren’t making any money in the process. Room service is perhaps hotels’ most labor-intensive service, says Bjorn Hanson, hotel consultant at PricewaterhouseCoopers. He adds that labor is far and away “the largest single expense hotels face”– about 25 percent of revenue goes to labor, on average.
Hotel parking used to be one of the true perks of staying in a full-service hotel, especially in big cities–a freebie that showed the hotel appreciated your business and wanted to make it easy for you to stay there.
But these days, parking lots have become profit centers. During a recent trip to Boston, Mike Ristau paid more than $50 to park at his hotel’s garage for three days. “It’s ridiculous,” says Ristau, a manager at 3M in St. Paul, “but I have to park my car somewhere.”
Hotels say they have no choice. As real-estate prices have soared, so has the value of those parking lots and garages. Moreover, many hotels don’t own their parking facilities. A spokeswoman at the St. Regis in New York, where parking costs $38 a day, acknowledges a surcharge, but says it simply covers extra labor and “preferential treatment” to guests.
The trend is creeping into the suburbs, too, says ASTA’s Perkins. While staying at a hotel several miles outside Boston, he parked in an open lot next door. Sure enough, on his bill he found that he had been charged for the privilege.
