Booked a hotel lately? If not, be ready for higher rack rates on whole new invoicing vocabularies, from “sustainability fees” to ambiguous “amenities fees,” replacing what is traditionally seen as hospitality being hospitable — free late checkout to facilities use.
With the flip-flopping recovery seeming more solid and sure this time, hotels and adjacent industries are raising rates and seemingly inventing new fees to make up for lost revenues from reduced travel, cancellations and refunds that have been the industry norm since 2020.
In response, the U.S. Department of Transportation (DOT) said Feb. 2 that it will finalize its new rule for Procedures in Regulating Unfair or Deceptive Practices first set forth in December 2020.
That has to do with aviation. The lodgings sector has problems of its own regarding new fees.
As travel industry news site Skift reported, after inflation hit 6.8% in November — its biggest spike in four decades — hotel rates increased almost 3% in just one month after they “soared 25.5% from November 2020.”
Inflation is affecting travel pricing from several angles, be it the cost of jet fuel, labor shortages, the cost of new COVID-19 safety compliance — and a certain amount of straight-up price-gouging.
When hotels advertise a rate that kickstarts the booking process, consumers are finding that by the end of that process, or worse on checkout, an assortment of fees can add up to 50% to the final price charged.
This “drip pricing” of additional fees is a practice that consumer advocacy groups, the DOT and Federal Trade Commission (FTC) are all aligned against.
This led to a showdown in 2021 where Hilton International, Marriott Corp. and MGM Resorts were hit with lawsuits from state attorneys general from Pennsylvania, Nebraska and the District of Columbia, spurred by years of work by advocacy group Travelers United.
In a January statement, Traveler United said, “When the regulators turn a blind eye to transgressions such as drip pricing and resort fees, the practice expands. Within the hotel industry, the initial battles against resort fees resulted in a growth of mandatory fees. Recently, this results in accommodation fees spreading to new entrants such as Airbnb.com and VRBO.com.”
In December, PYMNTS reported that “After a highly publicized investigation by Pennsylvania Attorney General Josh Shapiro into ambiguous fees that hotel and resort operators claim offset the cost of things like Wi-Fi access on-property, Marriott said it is instituting new price transparency rules for travelers.”
Read more: Marriott’s Promise to Divulge Resort Fees Up Front May Cause Payments Ripple Effect In Hotel Sector
As more pressure pushes on fees, expect more hotel chains to follow suit on transparency and seek fees elsewhere.
During Marriott’s fourth-quarter earnings call Feb. 15, Marriott Chief Financial Officer and Executive Vice President of Business Operations Leeny Oberg said, “In 2022, we expect continued growth from our non-RevPAR-related fees driven by higher contributions from credit card fees.”
Sen. Edward J. Markey of Massachusetts, Sen. Richard Blumenthal of Connecticut, Congressman Steve Cohen of Tennessee and Congressman Jesús “Chuy” García of Illinois reintroduced the Forbidding Airlines from Imposing Ridiculous (FAIR) Fees Act Dec. 9, seeking to do with hidden airline fees what state AG’s and advocacy groups are doing with lodgings.
“Too often, airlines blindside travelers with exorbitant charges at checkout caused by unexpected fees for basic aviation services,” the lawmakers said in a statement. “This price gouging has grown exponentially as a business practice over the last decade.”
Per that statement, “In 2019 — the last full year before the coronavirus pandemic disrupted air travel — airlines worldwide collected $109.5 billion in ancillary fee revenue, up nearly fivefold from $22.6 billion in 2010. That same year, U.S. domestic airlines collected $5.8 billion in baggage and $2.8 billion in ticket reservation fees alone.”
Responding to the sky-high airline ticket prices, buy now, pay later (BNPL) providers are stepping in with installment options in 2022, from American Airlines and Affirm’s partnership to Delta Air Lines working with American Express on BNPL for airfare.
See more: Flying the Friendly Skies One Installment Payment at a Time