Hotel Surcharges Expand Beyond The Energy Crisis

SAN FRANCISCO— In addition to energy surcharges, hotel chains are now beginning to pass on costs for other items— which were once free-of-charge— causing even more turbulance among guests. Buddy Warner, managing partner/San Francisco office of Jeffer, Mangels, Butler & Marmaro LLP (JMBM), noted it is “problematic” for hotels to add surcharges for amenities without clearly notifying guests of the fee, especially if those services were previously free. But as hotels fight a slowing economy and rising energy costs, they’re increasingly looking for easy ways to pass on costs. The San Francisco Chronicle recently reported the Century Plaza Hotel in Los Angeles charges $0.50 for a copy of USA Today, which it previously offered to guests for free. At the Hyatt Regency Monterey, room rates do not include the cost of the in-room coffee maker, which is part of a $10 per-night resort fee. The Ritz-Carlton Kapalua in Maui charges an extra $12-per-day resort fee that pays for, among other things, the ability for guests to charge hotel restaurant and gift-shop purchases to their rooms— a convenience widely available elsewhere at no cost, according to the San Francisco Chronicle. Warner told HOTEL BUSINESS® these additional fees are “dangerous.” “If you’re charging for a new service, like an in-room fax machine, than the hotel’s pretty safe. You’re charging for something that’s new and value added,” he said. “But when you’re charging for [in-room] coffee machines that were previously free and that have been commonplace in the industry for 20 years— that’s dangerous. That’s like saying if you want clean sheets you’ll have to pay an extra $5.” He noted many of these services, like in-room coffee makers, guests assume are free and hotels need to clearly notify guests if they plan to charge extra. “In-room mini-bars are usually locked and you need to ask for a key to open them, which indicates to guests that [their contents]cost extra,” said Warner. “However, if you have two bottles of spring water on a guestroom table, that you don’t need a key to get to, they appear to be free. If the hotel plans to charge for the water, there needs to be a sign clearly saying $2 [next to the water].” He noted hotels should make it clear to guests upon check-in that they will be charged the room rate, plus local taxes, and energy, or other, surcharges. “It’s dangerous for hotels to quote a lower rate that hides additional surcharges,” he said. PKF Consulting, which tracks the hotel industry, estimates fees, surcharges, and add-on services bring $6 billion a year in profits to the $100 billion-a- year hotel industry. However, as travelers become more educated and aware of surcharges, particularly those related to energy, they are more inclined to refuse to pay them. In the September issue of Consumer Reports, consumers were alerted that if they were given no warning at all of an energy surcharge, and the additional fee simply appears on the hotel folio upon check-out, they can refuse to pay it. And if they are informed of the surcharge at check-in, but were not notified during the reservation process, they should “still complain and try to have the surcharge waived. After all, that’s not the room price to which [they]agreed.” Whether or not all these surcharges are legal is still up for debate. A number of class action lawsuits are still pending in California and Miami, alleging that several hotel chains failed to properly notify guests of energy surcharges, which were widely used after the energy crunch started on the West Coast. One hotel chain involved in the suits, Hilton Hotels, has decided to eliminate all of its energy charges, corporate-wide, starting September 1. Hilton first implemented the surcharges in March of this year in 14 select markets, including: California, Colorado, Washington, D.C.; Illinois; Minnesota; Missouri; New Jersey; New York; Pennsylvania; Oklahoma