Hotels jack up fees… and consumers continue to pay
If you have gone on a trip and stayed in a nice hotel lately, you might have shelled out more than expected. You are not alone. Hotels are increasingly boosting the bill with add-ons: fees for their gym, Wi-Fi, the “free” newspaper. God forbid you actually open the mini-fridge.
Fees have become a big part of the hotel business model. A study by Bjorn Hanson of New York University shows that the industry is going to rake in $2.25 billion this year from all those little additional charges. That is 6 percent more than in 2013, and a new all-time record.
These are not your garden-variety charges, says Colin Johnson, the chair of hospitality management at San Francisco State University. He says customers used to balk at bills for long-distance telephone calls. Now the list of fees scrolls on and on: charges for early check-in, using the gym, late checkout, baggage holding, even putting your own stuff in the minibar. Now that, Johnson says, is really creative.
Hotels have had some rough years: first the recession, and now rental websites like Airbnb. Fees offer some extra profit. So why not raise them? Airlines do it, and passengers make do with a pack of peanuts.
“Some of the businesses, honestly, just don’t care,” says Carl Winston, who directs the Payne School of Hospitality and Tourism Management at San Diego State University. Nor do those business have to, he says.
Winston says these fees are not due to bad times. They are the product of big data. Hotels now know better what we will and won’t pay for. “They are really able to predict consumer behavior in a way that they had no possibility of doing in the past,” he says.
Lots of little fees give hotels more information to profile us, to squeeze out every dollar. Plus, they create ammunition to build customer loyalty. And if you’re angry, maybe you’ll get the “free newspaper” for free.
Stripping out all the perks allows hotels to keep the initial room price low. If they bring you in the door with that, Winston says, they won’t waste what is called “perishable inventory.”
“An airline or hotel can only sell its seat or its bed today,” Winston says. “If they don’t sell it, it’s gone.”
So, gripe all you want about the fees. As long as you keep coming back for the cheap rooms, they won’t be going anywhere.
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