Total fees and surcharges collected by U.S. hotels are increasing again in 2011, from US$1.7 billion in 2010 to a record US$1.8 billion. The increase reflects a combination of 4% to 5% more in occupied hotel rooms than in 2010, plus new or higher fees and surcharges at many hotels, especially resorts.
Fees and surcharges emerged as an industry practice inabout 1997 with resort fees (one of the first resort fees was titled, “amenities tariff”) and have increased every year except for periods following 2001 and 2008 when lodging demand declined. Energy surcharges were introduced in 2000.
Examples of fees and surcharges include: resort or amenity fees, early departure fees, reservation cancellation fees, internet fees, telephone call surcharges, the costs of local calls, business center fees (i.e. cost of sending/receiving faxes and sending/receiving overnight packages), room service delivery surcharges, mini-bar restocking fees, charges for in-room safes, and automatic gratuities and surcharges. For groups, there have been increased charges for bartenders, service, and other staff at events; charges for set up and breakdown of meeting rooms; charges for meeting rooms in which meals are served (the common practice has been that there is a charge for meeting rooms but not an additional room charge for rooms in which meals are served); and fees for master folio billing and baggage holding fees for guests leaving luggage with bell staff after checking out of a hotel but before departure.
Fees and surcharges are especially profitable; most have incremental profitability of 80% to 90% or more, so they represent significant contributors to industry profits.
The estimated amounts and trend of fees and surchargescollected is summarized below:
Year — Amount (in US$ billions)
2000 $1.2
2001 $1.0
2002 $0.55
2003 $1.0
2004 $1.2
2005 $1.4
2006 $1.6
2007 $1.75
2008 $1.75
2009 $1.55
2010 $1.7
2011 $1.8 (forecast)
These amounts are estimated based on selected interviews with industry executives and corporate travel executives, analysis of industry financial data, press releases, and information available on hotel and brand websites.
Contributed by Dr. Bjorn Hanson, Ph.D. Hanson is divisional dean, clinical professor, and HVS Chair of the hospitality and tourism management program at the NYU-SCPS Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management.