As flagged by View from the Wing, the greed of some hotel owners is just beyond words…
Thompson Denver owners demand 3% tip
Nowadays it’s not unusual to see some restaurants in the United States add an automatic service charge or gratuity. However, the Thompson Denver really takes this to the next level. Thompson is one of Hyatt’s lifestyle brands, which is known for offering extensive dining outlets.
The dining outlets at the hotel have a mandatory 20% “service & hotel surcharge” applied to all guest checks. Here’s how the hotel describes this:
A 20% service & hotel surcharge is applied to each guest check. 17% of this service charge is distributed to our team members who served you today. 3% is retained by the hotel. Added gratuity is at the guest’s discretion.
Okay, 20% seems like a pretty high mandatory service charge to add to bills, especially since it’s not optional (other times you’ll see restaurants automatically add a service charge, but give guests the option of removing it).
However, the bigger problem with this service charge isn’t the amount or even that it’s mandatory, but rather that 3% of this is “retained by the hotel,” with no explanation beyond that.
This is unethical and ridiculous
In the United States, restaurant workers typically rely on tips to make a living, as they receive base pay that’s significantly below the minimum wage (and of course in most places, that’s not even a livable wage).
To the hotel’s credit, at least the property is transparent about how it’s pocketing some of the gratuities that should go to servers. I mean, the hotel has to be, or else it could be in major legal trouble.
But this policy is downright offensive:
- What exactly is the hotel doing with the 3% “hotel surcharge,” other than just pocketing the money?
- The hotel is quite literally taking money out of pockets of workers; if you actually want your server to get a 20% tip, you’d have to tip 23%, and I have to imagine most people aren’t increasing their tip by 3% because of what the hotel is doing here
Unfortunately the pandemic really has brought out the worst in many hotel owners. Understandably, at the start of the pandemic, many hotels were in rough spots. However, in the meantime we’ve seen hotels essentially use the pandemic as an excuse to become higher margin businesses, and to screw workers and guests.
I mean, Hilton’s CEO has even warned that many of the hotel service cuts from the pandemic are permanent, and that hotels will become higher margin businesses. We’ve seen some hotel owners suggest that the solution to any labor shortages isn’t to raise wages, but rather for guests to tip more. And then we have this situation, where we essentially have hotel owners trying to take some of the tips of their staff.
Bottom line
The Thompson Denver has a 20% “service & hotel surcharge” on all food and beverage transactions. It’s mandatory, and 17% of it goes to staff, while the hotel retains 3% of it. This really is ridiculous. If the hotel wants to get away with demanding 3% more revenue, then the hotel should try raising prices by 3%.
But to have a non-discretionary 3% “hotel surcharge” is unethical, and ultimately comes out of the pockets of hotel workers, since they’re much less likely to get an actual 20% tip if the hotel pockets 3% of that.
What do you make of the Thompson Denver’s “hotel surcharge” policy?
I live in LA and this is standard here at restaurants to ensure staff is being taken care of. If you aren't willing to support restaurant workers with tips + contributions towards basic healthcare, stay at home. Also, it's clear who this angry customer voted for.
Here is a table of the minimum wage for restaurant workers in the US by state:
State Minimum Wage
Alabama $7.25
Alaska $10.34
Arizona $12.80
Arkansas $9.25
California $15.00
Colorado $12.32
Connecticut $14.00
Delaware $10.50
Florida $10.00
Georgia $7.25
Hawaii $10.10
Idaho $7.25
Illinois $12.00
Indiana $7.25
Iowa $9.25
Kansas $7.25
Kentucky $7.25
Louisiana $7.25
Maine...
Here is a table of the minimum wage for restaurant workers in the US by state:
State Minimum Wage
Alabama $7.25
Alaska $10.34
Arizona $12.80
Arkansas $9.25
California $15.00
Colorado $12.32
Connecticut $14.00
Delaware $10.50
Florida $10.00
Georgia $7.25
Hawaii $10.10
Idaho $7.25
Illinois $12.00
Indiana $7.25
Iowa $9.25
Kansas $7.25
Kentucky $7.25
Louisiana $7.25
Maine $12.15
Maryland $12.50
Massachusetts $14.25
Michigan $9.87
Minnesota $10.86
Mississippi $7.25
Missouri $8.60
Montana $9.00
Nebraska $9.00
Nevada $8.75
New Hampshire $7.25
New Jersey $10.30
New Mexico $9.25
New York $15.00
North Carolina $7.25
North Dakota $7.25
Ohio $8.80
Oklahoma $7.25
Oregon $12.50
Pennsylvania $7.25
Rhode Island $10.50
South Carolina $7.25
South Dakota $9.47
Tennessee $7.25
Texas $7.25
Utah $7.25
Vermont $12.55
Virginia $11.00
Washington $14.49
West Virginia $8.75
Wisconsin $7.25
Wyoming $7.25
Please note that these are the minimum wages for restaurant workers who receive tips. In some states, employers may pay a lower minimum wage to tipped employees, as long as the employee earns enough in tips to make up the difference to the state's minimum wage.
Check the sales tax. If you are required to pay sales tax on the 20% fee, then it is (sadly) mandatory. Often, though, I've seen these "service" charges excluded from the taxable total, which means they are technically voluntary. Bottom line: if it isn't sales-taxed, you can demand it be removed.
@Mike:
Actually, a number of restaurants /do/ slap a 3-4% surcharge on CC transactions. Not a huge share of the market, but it shows up in various places.
(I am not saying that I approve of this one bit, merely that it is [sadly] not unheard of.)
MURICAED
I believe its called GREED
Rare to see it so nakedly on display.
Do hotels in some states get taxed differently when adding a “destination fee” rather than increasing the room price?
The problem is this isn’t really new at a Hyatt property with regard to picking the pockets of their frontlines.The real reason this appears recent is that hotels are now making this information transparent likely because they may have to now legally.
Looking back years ago 2018 my server at Andaz Wall Street shared with me that the house keeps anything over 15% charged to the gratuity line I was tipping an extra 5...
The problem is this isn’t really new at a Hyatt property with regard to picking the pockets of their frontlines.The real reason this appears recent is that hotels are now making this information transparent likely because they may have to now legally.
Looking back years ago 2018 my server at Andaz Wall Street shared with me that the house keeps anything over 15% charged to the gratuity line I was tipping an extra 5 dollars daily as 15% was already included due to Globalist status
I switched to leaving cash which solved the problem.Now I always ask the server
It depends on where you are. In some Asian countries for example hotel rooms and restaurants at hotels 16% is added. 10% service fee and 6% tax. So, it depends on the details of the 20%. The fact that they are charging a service fee and want to charge a gratuity on top is absurd. I would not accept this if i discovered it on my bill!
Imagine thinking a 20% service charge is somehow unheard of. Might be time to get out of your Florida bubble.
Go check out The Art Hotel Denver, Curio/Hilton. One of the line items: Mandatory Charge: $20.00 per room, per night. No explanation! Why isn't this in the rate if it's mandatory? Not a resort fee either (because it isn't a resort)!
Some city hotels call it a destination fee.
Another day, another example of the ludicrous tipping culture in the USA. Just stop it and pay employees a decent wage. Of course I bet lots won't want that as with tips many are on very hefty amounts per hour!
If you are adding a mandatory 20% surcharge- just raise all the prices 20% and remove this “tipping” entirely.
Serviced apartments is the way to go. One can pick best places to eat. Will be in Berlin and Hamburg cancelled Hotel reservations and now use serviced apartments. Save ton of money and don’t have to fight unfriendly kid city Hotels and still am in downtown almost literally across from those hotels. Greed will eventually turn table towards buyers again.
I will avoid all Hyatt properties until Hyatt grows a pair and demand that The Thompson in Denver stop stealing 3% from their guests….Verges on being criminal!!!!
Grifting the night away...
I just report them to the city of Denver for wage theft. They take this seriously.
3% covers credit card processing fees. Not greed. Just business cost in a non cash society.
Then say so! "credit card processing fees." then credit card companies will go after you!
Lol it’s not wage theft. At all.
You don't have to stay here.
I generally try to avoid affiliated 3rd party brands within the major chains - and go for the standard branded hotels.
I don't understand North American pricing in general.
Why are taxes not rolled into the price being displayed when taxes are not optional? The rest of the civilized world (Europe and Asia) all do it.
If you want to charge for service, either roll it into the cost of the item itself, or clearly state how much service charge will be applied and don't expect or beg for tips (once again, this is already true in Europe and Asia).
the taxes will be the same (more or less) at most properties.
otoh, the other mandatory fees are crap fees.
Completely agree and let tipping go back to what it was intended for, outstanding service. If the tax is $2.50 on a $27.50 item, show the cost as "$30.00" and have the price include enough to pay the server a decent wage. If the server does an outstanding job, leave them a few extra dollars.
IMHO, the challenge is tipping is so engrained in our system, it would be difficult to do away with.
Not rolling taxes into prices makes sense for hard goods that don't change their prices nightly (as a hotel does) - at a retail store, for example, the base prices are typically identical across all the store locations nationwide, but the taxes vary by state, county, and sometimes city or district within the city. If I go to Target, a particular shirt might be 19.99 no matter where in the country I am, but in...
Not rolling taxes into prices makes sense for hard goods that don't change their prices nightly (as a hotel does) - at a retail store, for example, the base prices are typically identical across all the store locations nationwide, but the taxes vary by state, county, and sometimes city or district within the city. If I go to Target, a particular shirt might be 19.99 no matter where in the country I am, but in Tampa, FL, government imposed taxes are 7.5% (6% state taxes + 1.5% county taxes), but then if you go to Atlanta, GA, taxes are 8.9% (4% state taxes + 3% county taxes + 1.5% city taxes + 0.4% TSPLSOT tax). Some cities have entertainment districts designated where restaurants within those district boundaries have additional sales taxes (Omaha, NE has multiple different entertainment districts that each have different tax rates), so 2 Starbucks just a couple blocks away from each other might have wildly different taxes, depending on jurisdiction boundaries.
My understanding is that in Europe and Asia, VAT rates don't vary so widely - rather I understand it as they are fixed for an entire province, or the entire country, so there isn't the same logistical challenge in pricing/labeling.
That said, I do feel that service fees/resort fees/destination fees/etc., which are completely within the control of the business, should be rolled into the advertised price.
FICA, swipe fees. Other costs. 3% is about right. I understand the poor optics but it checks out.
How about they add another 5% for rent and another 5% for the cost of the food served. Poor optics but it checks out. Fees for all the owners expenses.
Every normal restaurant in the USA has to pay credit card fees, and they don't do this (at least, not 99.9% of them)
It would be one thing if they were taking 3% OF THE SERVICE CHARGE (I.e. 3% of 20% = 0.6%) because that basically covers the administrative cost of actually giving the money to the employee without eating some cost themselves. However taking 3% of the entire check also covers the cost of accepting credit cards for the entire bill -- and the card fee for the non-service portion of the check is their cost of doing business (and deductible).
No. Look up what FICA is. It’s a lot more than 3%.
No. Look up what FICA is. It’s a lot more than 3%.
I will never understand this silly tipping culture in the states. In Europe the workers get a salary and you only tip a few euro when the service was great. from 47,23 Euro to 50 Euro or so.
Which explains why service is indiferent and slow in Europe and fast and great in the US. Tipping is part and parcel of American culture. It encourages good and speedy service - the more customers served the greater the pay. Great customer service and efficiency are American values.
Seriously, what do you mean by "slow" service in Europe? I have been to Europe many times. Generally I don't see any difference in the service level between what I received in the States and those in Europe. I have seen European waiters sniff wine corks then replace corked bottle. Never seen that done by American waiters.
In Europe, I always ask waiters for recommendations and never had a problem if they speak English. When...
Seriously, what do you mean by "slow" service in Europe? I have been to Europe many times. Generally I don't see any difference in the service level between what I received in the States and those in Europe. I have seen European waiters sniff wine corks then replace corked bottle. Never seen that done by American waiters.
In Europe, I always ask waiters for recommendations and never had a problem if they speak English. When ordering in America, I always get a "good choice", and "how is everything?". If you prefer that kind of service, than good for you.
If you say service in Europe is slow (which I disagree), why don't you try to compare the service in Japan and Taiwan with those in America?
I am not saying waiters in the States shouldn't get paid but don't try to make it the customers' fault, which I think is very distasteful and frankly starting to backfire.
Regls - Why do people like you only want to lord this supposed carrot in front of workers *in the restaurant industry*? You act as though you can't stop going to a restaurant if you don't like the service, and instead must threaten to withhold a portion of the staff's wages from them if you aren't satisfied. Why not do this at the mechanic? The dentist? The supermarket checkout line?
And what the others...
Regls - Why do people like you only want to lord this supposed carrot in front of workers *in the restaurant industry*? You act as though you can't stop going to a restaurant if you don't like the service, and instead must threaten to withhold a portion of the staff's wages from them if you aren't satisfied. Why not do this at the mechanic? The dentist? The supermarket checkout line?
And what the others said is true; there's just not a service problem in Europe. I sit, I get my food, I ask for the bill and leave. I don't need the server sidling up to the booth next to me and complimenting my choices.
Side note, whenever I ask a server for a recommendation in the US between X and Y, I feel like at least 80% of the time, they recommend the more expensive option by default.
Because they get a higher tip the more you spend, I feel like this discourages objective advice.
Lol. Go to Japan where service is immaculate, efficient and tips are not only not expected but dissuaded. Good service comes from pride in one’s vocation. In America, the idea of “service” is part time strippers moonlighting as waitresses constantly nagging with ice tea refills like homeless dogs begging for scraps.
Why are Americans always in such a hurry and need speedy service? Why not just sit and enjoy the meal? I live in Europe and receive far better service than when I’m in the US, even if it sometimes takes a bit longer.
You can often tell when a restaurant review is written by an American because it will usually be about how quickly they got their food. The actual quality of the meal is secondary.
That’s garbage. Service in the US is generally awful and has gone downhill over the years.
Americans tend to fake it with all those bogus smiles and have a nice day c—p.
In the US employers may pay $2 an hour and the rest of the income is made up with tips. That should be illegal. So many of these wealthy employers are raking in a fortune and don’t care about staff
A tip...
That’s garbage. Service in the US is generally awful and has gone downhill over the years.
Americans tend to fake it with all those bogus smiles and have a nice day c—p.
In the US employers may pay $2 an hour and the rest of the income is made up with tips. That should be illegal. So many of these wealthy employers are raking in a fortune and don’t care about staff
A tip should be an exception and not expected.
Customer service and efficiency are certainly not American values.
And the only country in the developed word with no sick pay.
I’ve visited the US dozens of times as well as lived there briefly. Staff in hotels, stores and restaurants are generally indifferent and fake.
I just got back from a month traveling in Europe (Northern Europe) and the service was overall much better than in the US. I do not go often (about once, maybe twice/year) but generally find service better there than here. Regarding speed, that is a cultural issue as generally, people in Europe take more time to eat and enjoy it more. Here, we want to get in and out.
Haha "why service is fast and great in the US" - what utter poppycock! I've had plenty of rubbish service in the US, by comparison in Japan and Australia (where servers are paid decent wage and there's no tipping culture) I've had excellent service.
indifferent is the service in US all the time. I never get slow service in most European countries. And the people are nice without being greedy. Greed that's the word. Getting money for nothing.
Never slow in Europe! That is a myth! The American restauranter is plain greedy. They need to start paying living wages. That is also part of a bad American culture.
The average salary of a server in Germany is about 20,000 per year. If you think that is a living wage then continue round up. A 10-12% tip in most of Europe is more appropriate. They do have higher salaries than their US counterparts but that isn't really saying much now is it.
Restaurant workers in California are paid the full minimum wage of $15.50/hr before tips. In Colorado too, but lower, $13.60. Many other states have similar laws. It is innacurate to make a blank statement that restaurant workers in the US get paid base wages belom minimum wage.
I know, right! It has been like that for years, but "some people" like to perpetuate the myth that restaurant workers are paid less than minimum and should be compensated by tips.
Didn't they say raising minimum wage to $15 is to bring it up to living wage?
I mean if you have 6 people, the restaurant will only add 18% service charge. Nowadays, when you get the check, suggested tips is 20%, 22% and...
I know, right! It has been like that for years, but "some people" like to perpetuate the myth that restaurant workers are paid less than minimum and should be compensated by tips.
Didn't they say raising minimum wage to $15 is to bring it up to living wage?
I mean if you have 6 people, the restaurant will only add 18% service charge. Nowadays, when you get the check, suggested tips is 20%, 22% and 25/28% "after tax". Who tip on tax?
I was very generous with tipping during the pandemic at 25% to 30%. Now, I will just do the standard 18% before tax.
In addition, I just stopped going to restaurants in San Francisco with that 5% "mandatory SF tax", which btw is not really mandatory 5%. The worst was we had lunch at Rosewood Hotel on Sand Hill, the check had a 5% living wage supplement. Seriously, it is Rosewood hotel and they have the nerve to say they are not paying their staff living wage.
I love living in the Bay Area, but this is just really stupid and ridiculous.
The move to $15.50/hr minimum wage made it so much easier for me to go back to tipping only for true gratuity. $31k+/yr is not lavish living but it's pretty good for that type of low-skill, low-labor work.
Over the last several years, it's become quite common for restaurants in San Diego, and other areas I've traveled to, to add a 2-4% surcharge to their menu prices, usually described as being to recover the added cost of employee benefits. If they add an automatic gratuity, it's in addition to the surcharge.
While I'd definitely rather see the menu prices increased rather than an added surcharge, what the Thompson is doing is really no different than this.
Doesn't seem like a me problem because if I see a mandatory 18-20% service charge I simply leave zero tip
You’re still leaving a 3% tip to the hotel owner(s).
But hey, “not a [you] problem,”
The hotel isn’t keeping 3% of the tip, they are keeping 15%. This doesn’t justify the people who are saying this is to cover credit card fees.
You’re forgetting FICA. FICA and swipe fee should be about 2% if the total. There are likely other taxes/fees/costs that push it to 3%. It’s bad optics but is mostly fair.
Looks like we have found the guy who works for T2 Hospitality. All businesses pay FICA for their employees and seem to manage to magically cover those costs in the price of goods/services. And the swipe fee isn't anywhere close to 15% which is what the 3% taken out of the 20% fee only leaving servers with 85% of the fee
By collecting the 3%, they are collecting 2.xx% of the entire check. This covers the CC fees on not only the tip, but the entire bill. Not saying it’s right though.
America is by far the dumbest and most inhumane country. Won't ever travel there again.
I bet you never been to any African country.
Oh no! How will we go on without you?!
I just stayed at Thompson Dallas, saw the charge, raised the eyebrow, asked the question, augmented the tip. The staff at Thompson Dallas, especially at the Pool and National restaurant is really good, and worth 23%. But it's an odd policy, like they are assuming visitors are from EU and don't (know to) tip...
If you want to deep dive, hotels have been long doing this with banquet events. Typically you have a 22% service fee and there is a formula for how much the actual servers receive and split along with extra allocations for captains etc. Most banquet events are so expensive that the servers still do well.
This is actually because the most of the tip is considered charged via credit card, hence the hotel is being hit with CC fees by visa/Amex etc. The cost is around 3%, and hence the hotel collects it. Just poor communication, but justifiable
Leaving aside that this would still be highly problematic, it's also *NOT* what the General Manager of the hotel explained to my reader who flagged this charge.
BS. Not justifiable at all. Is the same 3% extra charge added on hotel room rate, too? If you pay cash, do you get 3% reduction?
CC-fees are cost of doing business in the US and calculated in, that you folks in US have poor representation and laws which do not limit the charges is simply on you.
Name and shame these properties on channels like TA, google review, flyertalk etc. Never staying at places (nor that I would at a Thomson) when such behaviour is published.
so do they remove the 3% retained by hotel if you pay your bill in cash? will they only keep 1.5% if i pay with discover, which has lower interchange fees?
when you pay for an item or service, the presumption is that the cost of doing business (i would include facilitating payment as a cost of doing business) is baked into the price of the good. if not, it’s a slippery slope. why not...
so do they remove the 3% retained by hotel if you pay your bill in cash? will they only keep 1.5% if i pay with discover, which has lower interchange fees?
when you pay for an item or service, the presumption is that the cost of doing business (i would include facilitating payment as a cost of doing business) is baked into the price of the good. if not, it’s a slippery slope. why not then unbundle further add a surcharge for the rent they pay? for the POS software license? for the accounting service that handles their finances?
even if the 3% is intended to 1:1 cover credit card fee, it should be separate line item. why would it make sense to include financial tooling overhead in a “service” fee? service would imply human labour
this is obviously a bad faith slight of hand trick to raise prices.
@Lin, CC fees are supposed to be absorbed as a cost of doing business as always has been. Otherwise by your logic there needs to be a 3% discount for those who pay their bill by cash.
Every restaurant has to pay this. It's not unique to this hotel. This hotel is just trying to take a cut of it instead of absorbing it as a cost of business as every other restaurant does. They also have to pay for soap, water, and toilet paper but I think you'd hopefully agree paying to use the toilet or chipping in $0.20 for the server's uniform would also be ridiculous. This is a business...
Every restaurant has to pay this. It's not unique to this hotel. This hotel is just trying to take a cut of it instead of absorbing it as a cost of business as every other restaurant does. They also have to pay for soap, water, and toilet paper but I think you'd hopefully agree paying to use the toilet or chipping in $0.20 for the server's uniform would also be ridiculous. This is a business expense that needs to be built into the pricing; the reason they do it like this is to deceive you into thinking the prices are lower than they are. They can just increase their prices by a few percent and all this is resolved. This is the shady (and stupid) way to do it.
If this is true, it could be avoided by adding the costs of CC fees in the price of the food. Just advertise prices including tax, service charge and fees like in 99% of the world.
Credit card fees are tax deductible for a business. They know this. And if they don't, it's time for a new accountant. By collecting a surcharge, the business is essentially double dipping. They're getting a write off on the swipe fee plus they're collecting a profit on the swipe fee.