2016 RFPs: Keep Your Eye on Surcharges

Planners deep into hotel RFPs for 2016 are already dealing with the reality that both room rates and state and local so-called “bed taxes” are going up. Add to this a third headache as negotiations head into their final weeks: expect lodging surcharges to jump as well.

RFPsurchargesTotal fees and surcharges collected by U.S. hotels are forecast to increase to a record $2.47 billion in 2015, up from $2.35 billion in 2014. Included are both first time fees and surcharges for certain services as well as increases in charges levied in previous years, according to respected lodging industry authority Bjorn Hanson, currently clinical professor at New York University’s Tisch Center for Hospitality and Tourism and former head of the hospitality practice at PricewaterhouseCoopers.

Fees run the gamut from resort or amenity fees, early departure fees, Internet fees and mini-bar restocking fees to charges for in-room safes, unattended parking, overnight package delivery and holding fees for stored luggage.

New surcharges Hanson is starting to see more often include charging for early check-in (popular in Las Vegas) and for guaranteeing a specific room type (king rooms especially).

Charges aimed squarely at groups are also on the rise. These include charges for bartenders and other staff at events, special fees for set-up and breakdown of meeting rooms and even administrative fees for providing master folio billing.

Unless planners ask during negotiations—or require that such surcharges be spelled out in the RFP process—they may not even realize such fees exist or that their cost is going up. Attendees are even likelier to be in the dark regarding fees that target guests, at least until checkout.

Any single fee may not break the bank. Taken cumulatively, however, planners could be looking at thousands of dollars in unexpected costs, depending on the size of the group, length of the event, and so on. It’s a scenario particularly hard to swallow in a year when guest room rates and airfares are going up as well and they’re increasingly under budget pressure.

Hotel sales managers are able to waive or limit some fees and surcharges. Like any negotiation, much depends on the give-and-take. The more flexible a planner can be (on dates, arrival patterns, must-haves, additional revenue streams, etc.), the better. Certainly coming to the table fully-armed with hard numbers as to how competing hotels in the market stack up on these issues will help.

Hanson marks the start of the current escalation in the number and amount of fees to the widespread introduction of energy surcharges in the early-2000s. Over the years, certain charges hotels had grown accustomed to (such as in-room telephone and television movie rental charges) shrank dramatically with changes in technology, forcing them to search farther afield for replacements.

But charges for early check-in when the room is ready? Or for providing a master folio for billing? Seriously?

Photo credits: Shutterstock

 

 

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