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

(Mis)Uses of Technology

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.

Filed Under: destination fee, fees, ftc, hotels, nyc, sneaky fees, times square