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Revenue Estimate at $1.8 Billion a Year for New Fees Charged by Hotels
Representing an 80% Increase in Hotel Service Fees in the Last Decade


By Hugo Martin, Los Angeles TimesMcClatchy-Tribune Regional News

Sept. 22, 2011--Telephone and mini-bar charges have long been standard, but the hotel industry is expected to pocket a record $1.8 billion this year with an assortment of new fees for housekeeping, room-service trays, bell hops and early cancellations -- services once thought to be part of room rates.

The latest revenue estimate represents an 80% increase from 2001, when hotels generated about $1 billion from such fees, according to new study by Bjorn Hanson, dean of New York University's Preston Robert Tisch Center for Hospitality, Tourism and Sports Management.

Hanson said the increase in revenue comes as hotels have added many new charges and guest demand for hotel rooms has gradually grown in the last few years.

Among the newest fees popping up at hotels across the country, he said, is one of about $2.50 to have the hotel bell staff hold your bags either before you check in or after you check out.

Travelers have taken note of the new charges.

"They are getting sneakier and sneakier," said Johnny Foster, a retired police officer from North Carolina who was staying at the Wilshire Grand Los Angeles. "Are you sure the politicians aren't running the hotels?"

He suspects hotels are charging more for nearly everything in hopes that guests won't notice.

Brenda Vere, a Boston resident who was staying at the Westin Bonaventure Hotel & Suites on a business trip, complained that some hotels charge up to $6 for a bottle of water. "If they don't want me to drink the water then why do they put it in the room?" she said.

Hotel industry representatives defend the charges and say hotel guests can avoid many of them by simply choosing not to use the services.

"It's really a consumer choice as to which services they want to get," said Randi Knott, vice president for government and legal relations with the California Hotel & Lodging Assn.

Knott had not read Hanson's study but said the increase in revenues generated by such fees are a reflection of better economic conditions in the country.

"I think more business travelers are able to spend money on these extras like room service and Wi-Fi and things they want to use," she said.

Bob Amano, executive director of the Hotel Assn. of Los Angeles, said he has not noticed an increase in such fees at local hotels. "In L.A., that hasn't been that prevalent," he said.

Because such fees vary by hotel and by season, Hanson said he could not calculate how much each fee generates for the industry.

"It isn't homogenized throughout the industry," he said. "This year, for example, some hotels may introduce a mini-bar stocking fee, but other hotels may reduce the in-room phone charges."

Still, Hanson estimated that the most revenue came from resort fees of up to $20 per day, early cancellation fees that can equal the room rate, a tray charge of about $2.50 that is added with room service orders and a housekeeping charge of $10 to $13 per day.

And while hotels still make nearly 99% of their revenue from hotel rates, Hanson said the fees have been a boon for the lodging industry because many charges are for services that are already included in the hotel rates.

Thus, he said, hotels can make profits of 80% to 90% on such fees as housekeeping charges or mini-bar restocking fees. "These dollars are highly valued because many are uniquely profitable," Hanson said.

In the airline industry, the trend of charging passengers extra fees to check bags or order food on a flight has sparked widespread anger and prompted federal regulators to require the airline industry to disclose the extra charges on airline websites.

But Hanson said that airlines are only following the lead of the hotel industry, which began the trend in the late 1990s with the introduction of resort fees, sometimes titled "amenities tariffs."

"The airlines are now providing cover for the hotel industry because charging someone to check their luggage somehow makes charging a guest to restock a mini-bar seem like a minor offense," he said.

hugo.martin@latimes.com

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(c)2011 the Los Angeles Times

Visit the Los Angeles Times at www.latimes.com

Distributed by MCT Information Services



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