New York City Hotels Say Obnoxious $25 'Destination Fee' 'Improves The Customer Experience'

from the that'll-work dept

Taking a page from the telecom and banking sector playbooks, New York City hotels have decided to add a $25 “destination fee” just for the honor of being able to sleep somewhere near the audio visual cacophony that is Times Square. Major hotel chains like Hilton, Marriott and Starwood are all adding the new destination fees, which aren’t part of the advertised rate — and are only added to the final tally at checkout. Said fees mirror other “resort fees” used to jack up advertised rates in other destination locations like Hawaii, the Florida coast, or Las Vegas.

In many instances, the fee is being called an “urban destination charge,” and is being applied each day of a customer’s stay:

“But this week, a guest booking a room at the Hilton New York was alerted as he finalised payment that a ?Daily Mandatory Charge? of $25 would be added to the room rate, covering an ?Urban Destination Charge?, ?premium? internet access, local and freephone calls, and a total of $25 credit for food and drink in the hotel.

The credit, it turned out, is a one-off figure ? though the Urban Destination Charge is due every day of the stay.”

If you’ve paid attention to the problems in the telecom sector, you’ve probably realized that this is now standard industry procedure. Cable and phone companies alike often make up entirely nonsensical fees (with names like the Internet Cost Recovery fee or Broadcast TV fee) with the express goal of advertising one price, then charging another. To add insult to injury, they’ll then crow about how their advertised rate has remained the same from year to year. That’s been an obvious case of false advertising for going on a decade, yet legal or regulatory accountability for the misleading charges remains elusive at best.

In telecom, the FCC had made a little noise about cracking down on the misleading surcharges in the form of a “nutrition label” for broadband that would clearly disclose any caveats, but that effort appears to have stalled. In the hotel industry where competition makes such action less pressing, the FTC gave hotels a fairly tepid warning about the practice in 2012, stating that the practice of hidden fees “may be deceptive” and “may violate the law.” Hints that a new FTC crackdown on the practice was coming similarly emerged last year, only to apparently disappear back into the swamp of regulatory intent and good intentions.

Just like in the telecom industry, when hotels are asked whether jacking up the advertised rate post sale could be construed as predatory and obnoxious, they’ll usually trot out some rubbish about how the practice enhances the “customer experience.” Take this bit of prattle from Starwood owners Marriott International, for example:

“The Destination Fee was created as a way to lift the guest experience by providing added value to a hotel stay. Each hotel may offer a combination of hotel services (such as dry-cleaning, pressing or a food & beverage credit); local experience vouchers for free/discounted events and attractions (such as city tours), and/or access to fitness programs (such as yoga or cycling) in nearby studios…”The implementation of the Destination Fee gives us the opportunity to test how a bundle of benefits that our research shows are valuable to guests might enhance the stay.”

Of course that’s bullshit, since not knowing what the hell you’ll actually be paying for your room kind of puts a damper on the entertainment value of the whole affair, and users are usually docked these fees regardless of whether they use amenities or not. The goal again is to falsely advertise a lower rate, full stop. That may be a problem for competitors foolish enough to clearly advertise their real rates, since they superficially could appear to be a worse value. On the flip side, hitting your visitors with obnoxious, hidden fees is a wonderful way to help drive business to the share economy competitors these companies have been whining about for the better part of a decade.

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Comments on “New York City Hotels Say Obnoxious $25 'Destination Fee' 'Improves The Customer Experience'”

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Anonymous Coward says:

Re: Re: Re:

Here in Canada a cable/phone/ISP company’s advertised price on the web site is the "introductory price." It’ll go up after x months.

I’ve found the third-party providers better about this (but some do the same). Still, I’ve never seen anyone actually charge the advertised amount. They’ll bill tax on top of that, which is the common scam in North America. (Elsewhere, that would be false advertising: they’d have to include taxes in the advertised price, because it’s not like they’re a surprise.)

Anonymous Coward says:

Resort fees...

As I’ve been traveling back and forth to Las Vegas often over the last 6 years, I deal with these “Resort Fees” all the time.

They’re ridiculous.

Someone visiting for the first time is in for a fun surprise if they booked their hotel online thinking that it’s paid for – you’re likely to pay an additional $25-50/night depending on where you stay after you arrive.

I’ve been told by multiple hotel staff that it covers the services that they provide: Free airport shuttle, free internet connectivity, fitness center, pool access, etc. However, if you tell them you plan to use NONE of those services, they’ll still insist that the fee is mandatory. They just use these service offerings as an excuse to rape most people post-sale.

Anonymous Coward says:

Re: Resort fees...

The problem is that in vacation destinations like Las Vegas, virtually every hotel in town engages in the practice of having hidden fees of some sort. The few honest places that don’t play these price shenanigans are at a competitive disadvantage, and eventually turn to the dark side if they want to stay in business.

Anonymous Coward says:

Re: Caveat Emptor

Yup, most consumers are price sensitive and notice the bottom line on hotel bills — hotels with deceptive practices eventually lose customers

Deceptive pricing is common in retailing. Who protects you from supermarket/food deceptions (e.g., less content in the cereal box, at a higher price)?

This buyer/seller game has only been going on for thousands of years. Caveat Emptor

hegemon13 says:

Re: Re: Caveat Emptor

Who’s to protect me? Third-grade math. Price/oz = price per ounce. And since the weight must be clearly labeled, it’s available to anyone with the willingness to pay attention. It’s not hard at all to determine how much you’re actually paying for food. (Hint: often the giant “value size” is actually more expensive per ounce.) You just have to be willing to pay attention, and all the information you need is right there prior to purchase.

With this kind of garbage, we’re talking about non-advertised charges that the buyer doesn’t know about until after the purchase (or added sneakily during the checkout process). It would be like finding an extra 20% “flavor enjoyment charge” on your grocery receipt.

madasahatter (profile) says:

Alienating customers

Alienating customers is not a viable long term strategy. When I travel, I like the hotel fees to all inclusive when booking with the only line items added to be something I asked for while there. Like most I am budgeting my travel costs and want to know an accurate rate.

I will stay at properties that do not find new ‘fees’ that are added on to the room rate.

R2_v2.0 (profile) says:

Where's the FTC on this?

This is false advertising and the FTC should be calling them on it.

One of the better things our FTC equivalent has done in Australia is clamp down on this type of drip feed pricing.

It’s noteworthy that the human sock puppet running the FCC for you guys has decided that it’s too hard for poor little ISPs to work out how much they’re going to charge you so you’ll need to work that out yourselves.

Anon says:

Re: Where's the FTC on this?

Exactly. An added “fuel surcharge” at the discretion of the airline is simply a higher ticket price in two pieces. Similarly a “destination fee” is simply a higher hotel room price, with deceptive advertising if not mentioned.

There’s a case for not advertising taxes, customs fees, or other “out of our control” prices; or if it’s discretionary – “carry on your small luggage and don’t pay”. But if a company is solely in control of setting the price and they can change it, it’s part of the price and should be advertised as inclusive of that.

Fargleflopper the Unhinged says:

Breach of contract

If a customer has booked online, probably through a third party, and these additional charges haven’t been listed (either properly or in small print), aren’t the hotels in breach of contract? Surely it’s illegal to insist on changing the terms of contract once the other party is committed (due to them actually arriving at the hotel)?

John85851 (profile) says:

Some better hotels will remove the resort fee

Recently, my wife and I took a weekend vacation to a Marriott near Disney World. They wanted to charge a $25 “resort fee” to cover things like “free” shuttle service to the theme parks and internet access.
We told them that we have our own car and annual passes, so we don’t need the shuttle service.
And like most people, we have our own cell phones, so we don’t need the internet service.

So they took the resort fee off our bill.

However, if all the hotels in New York or Times Square charge the same fee, then it might be hard to convince them to remove it.

G says:

I am offended by the destination fee. Esp3cially when I am advised that it gets me free services (e.g. internet access) that I already have by virtue of the status I hold in the hotel’s loyalty program. Rather than vent your displeasure on a website, do what I did. Write the hotel’s CEO. This nonsense won’t stop until enough loyal customer convince these guys that there is competition out there that is more reasonable!

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