Human Capital & Careers

The Mint Is Extra

Hotels have been squeezed for income in the past few years, and business travelers are discovering some surprising surcharges.
Tim ReasonMarch 5, 2004

Business travel may be picking up, but some hotels still boost revenues by tacking unexpected and sometimes ludicrous charges onto bills, according to ongoing research by PricewaterhouseCoopers LLP.

Among the charges likely to make travelers flip out at checkout are resort fees ($15-$20), fax charges ($1-$5 per page), automatic gratuities for bellhops and housekeepers, handling charges for packages, room-service delivery fees ($2.50, in addition to an automatic gratuity), and minibar-restocking charges (up to $2.50 of the item price). The Sheraton chain even adds an automatic charge for charitable contributions.

The worst offenders fall into the two most expensive categories of hotel, says Bjorn Hanson, head of the hospitality and leisure practice at PricewaterhouseCoopers.

“The velocity with which surcharges arrive and disappear has increased,” adds Hanson, making it difficult for experts to track just how much the practice costs companies.

“There is no one place on the [hotel’s] financial statement where those surcharges are captured discretely,” says Robert Mandelbaum of PKF Consulting in Atlanta, which benchmarks hotel financial performance. “When you add them all up, I’m sure they are less than 2 percent of a hotel’s typical revenue.” Nonetheless, the last few years put a pinch on revenues, he says, “so hotel managers have focused on those minor sources of income.”

Mandelbaum says the first half of last year showed phone calls—another long-loathed hotel charge—declining to 1.6 percent of hotel revenues from 1.9 percent for the same period in 2002, as travelers increasingly relied on mobile phones. And more consumer rebellions are likely, says Lalia Rach, dean of the Tisch Center for Hospitality and Tourism at New York University. Indeed, a judge is now reviewing a proposed class-action settlement with Starwood Hotels & Resorts, which allegedly misrepresented a resort fee as a tax, says plaintiff’s attorney Peter Morgenstern of Bragar Wexler Eagel & Morgenstern LLP.

“It’s almost a slap in the face of the customer to think we’re too unaware to notice” the fees, says Rach. She still remembers being dumbfounded when a checkout clerk told her a few years ago that an energy surcharge of almost $10 on her bill was “to combat the cost of the California energy crisis.”

“Do you know that we’re in Chicago?” she asked.