Maybe I’m naive, but I always assumed that hotel service charges went entirely to, you know, the people providing service? But apparently not?
In this post:
St. Regis Deer Valley takes cut on service charge
On the last evening of our stay at the St. Regis Deer Valley (yes, that lovely hotel), we ordered room service dinner, as we wanted to go to bed early. When the food was delivered, I was presented with the check, as you’d expect.
There was a $5 delivery charge, and there was also a 25% service charge. Okay, the delivery charge is pretty standard in the US, while the service charge is definitely on the high side. You know the kicker, though? The employee who presented me with the check informed me that only 10% of the 25% charge goes to employees, and the rest goes to the hotel. I’m sorry… what?!?
I assumed I wasn’t hearing correctly, so I called the private dining number on the phone. I explained to the representative that I had just placed an order and wanted to make sure I was tipping appropriately, so I wanted to make sure that the entire service charge does in fact go to employees. He told me that of the 25%, 18% goes to employees, while 7% goes to the hotel.
Okay, so I’m not sure which of those numbers is true, but one thing seems to be for sure — not only does the hotel pocket the delivery charge, but it also pockets somewhere between 7% and 15% of the 25% service charge.
I mean, think of the absurdity of this. I’m basically made to feel cheap if I’m “only” paying a $5 charge plus a 25% service charge on my room service order. I guess I can’t blame the hotel for trying to take some more money from its employees… it must be hard to make money when you’re only charging $4,000 per night for a base room!
By the way, you’ll also probably notice that the sales tax applies to both the delivery charge and service charge. As it turns out, that’s actually a law in Utah, which is one of the only places with such a law. Yes, you pay taxes on mandatory service charges.
Is it common for hotels to take a cut on service charges?
I had always assumed that hotel service charges — whether a percent of room rate or a percent of food and beverage spending — went directly to employees. So now I’m curious — is the St. Regis Deer Valley the exception rather than the norm by taking a significant cut of the service charge, or is this how the hotel industry operates?
I’m probably one of the less anti-tipping people out there, in the sense that I understand that this is just how service works in the United States, and I want to make sure frontline employees are well taken care of, because they work really hard.
But for me, this crosses the line. If I’m being charged a delivery charge plus a 25% service charge, that better cover gratuity, and employees better be taken care of. But instead, they’re apparently not even getting 20% of the amount there.
I had always assumed that hotel service charges exclusively went to employees, since they’re the ones providing the service. But at least at the St. Regis Deer Valley, the room service staff told me that they only get a percentage of the 25% service charge, and that’s not even factoring in the delivery charge (which goes to the hotel).
Is this a common hotel industry practice?