Basics of resort & destination fees
Resort and destination fees are additional mandatory fees when you’re booking a hotel that often aren’t disclosed in a transparent way.
Why do hotels charge these fees?
- They’re a way for hotels to try and get more revenue without increasing the “transparent” room rate
- It works out better for the hotel than an increase in the room rate, since historically they don’t have to pay travel agents a commission on these fees
- In some areas it also allows hotels to skirt the typical occupancy tax that otherwise applies on the room rate
What’s awful is that these used to primarily be limited to resorts, but nowadays we’re seeing these fees spread to all kinds of city hotels.
One online travel agency has taken on these fees
While I don’t for a second believe they did this out of the kindness of their hearts, I’m in favor of a change that booking.com recently made. Recently Booking started charging their standard commission on all mandatory hotel fees, which eliminates one of the major reasons that hotels charged these to begin with.
Like I said, they most definitely did this to line their own pockets, and not to look out for consumers. At the same time, I tend to think that anything that is done to give hotels less of an incentive to add these fees is a good thing.
Hotels think consumers want to pay fees
Skift has a story about how Expedia is considering following Booking’s lead when it comes to collecting commissions on these fees.
They present both sides of this debate, including quoting the CEO of the Hotel Association of New York, which represents nearly 300 New York City hotels, which collectively have 80,000 rooms and 50,000 employees.
The CEO of this organization claims that guests “appreciate the value offered” by these fees:
“Resort and urban fees provide real tangible value to the guest and there is plenty of empirical evidence that a majority of guests have no problem with it, and appreciate the value offered. Booking’s adding a commission to that is akin to tacking on a charge on to a range of other products and services guests consume at a hotel after checking in, and will only increase the cost to the consumer while unfairly penalizing the largest customer base: hotels.”
I’m curious what the “empirical evidence” that they’re referring to is. Perhaps they reason that guests “have no problem with” the fees because they end up paying them (because they’re, you know, mandatory)? And therefore they also reason that guests appreciate the value offered by these fees?
He’s also completely off base to argue that this is the same as online travel agencies charging for additional services after check-in. These fees are mandatory, and there is no way to avoid them. There is a way to avoid other add-ons after check-in.
For the most part, hotel “destination fees” simply include:
- Things that were already included for free (access to the gym, luggage storage, free Wi-Fi, etc.)
- Things that have very limited value (free local phone calls)
- Things you might find in a mailer full of coupons (usually 10-15% off something you probably don’t care about it)
So… would those of you who appreciate the value offered by destination fees please make yourself known in the comments? Bueller? Bueller? Bueller?
I have a challenge for the CEO of the Hotel Association of New York: if guests like these fees so much, and if you’re unhappy about online travel agencies taking a commission on them, why not make them voluntary? It seems like a win-win-win:
- Consumers have choice
- Hotels still win since people will want to pay these due to how much value they add (apparently!)
- Online travel agencies won’t be able to get a commission on these fees, since they won’t be mandatory