Hotels in the United States will generate a record $2.93 billion in 2018 in daily, mandatory hotel fees, according to a new report from Bjorn Hanson, an adjunct professor at the New York University School of Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism.
The total represents an 8.5 percent increase from 2017, and charges are expected to continue to rise in 2019 as hotels try to combat increasing payroll and real estate costs.
“The increase for 2018 reflects a combination of approximately 2.5 percent more occupied hotel rooms than in 2017, and 6 percent more fee and surcharge categories and higher amounts,” he told the New York Times.
About two years ago, urban luxury and full-service hotels across the U.S. began adopting the fees, which allows them to keep room rates low and aren’t typically commissionable for travel agents. The fees, which are normally somewhere around $25 but can range up to $40, have typically been associated with gyms or pools at hotels. However, they are now more often charged for regular amenities like bottled water, breakfast, and newspapers, according to Hanson.
“Although the U.S. hotel industry will have the highest occupancy rate in 2018 it has had since 1981, the room rate increase will be only 2.5 to 3 percent,” Hanson told the paper. “At the same time, there’s a large increase in labor costs and real estate taxes and rising interest rates. Although occupancies can’t go up much more, room rates in many cases are not covering the increased expenses. Hotels thus have an unusual incentive to find additional forms of revenue and profit.”
According to ResortFeeChecker.com, as of July, 228 hotels in Orlando charge the mandatory fees; in Miami, 202 properties tack on the extra fees.
More than 130 hotels in Las Vegas charge the fees, including the Four Seasons Hotel Las Vegas that charges $44.22 for services like pool access, fitness center access, internet access, and phone calls, and the JW Marriott Las Vegas Resort & Spa, which charges $30 for in-room coffee and bottled water, internet access, and parking.
There has been some movement by government agencies to protect consumers from the fees. Most recently, in 2017, the District of Columbia Attorney General sued to enforce an investigative subpoenas it served on Marriott International in connection with a national investigation around the “deceptive price advertising techniques used by the Marriott.” The FTC issued warnings about drip pricing in the hotel industry in 2012, and despite national criticism of the practice, the practices have continued.
And, based on anecdotal reports, these charges at urban hotels are receiving limited guest resistance, Hanson said.