The Pros and Cons of Displaying Additional Mandatory Fees

We have all been there. You are scrolling through rates for a hotel room, find one that looks great, and then you see the dreaded words “additional fees may apply.” Suddenly, that great rate doesn’t seem so great anymore. As a consumer, it can be frustrating to see those additional fees. Often, we don’t even know what they are for. What is a kitchen fee? What does the service fee cover? How much are they going to be?

As a hotelier, you may feel like you are in a tough spot. You want to be as upfront and transparent as possible with your pricing. But at the same time, you don’t want to scare away potential guests with a high rate that includes all the fees. Most of us feel like there is work to be done.

There has been a renewed interest in the display of additional fees after the Biden administration announced they may go after hidden or “junk fees.” The HSMAI Revenue Optimization Advisory Board recently discussed this relevant-again topic.

Key Takeaways:

1. Hotels are keeping an eye on the competitors fees and are unlikely to remove fees unless competitors remove them, or government enforces regulation.
2. If there is regulation to remove the rates, it will be a challenge to get technology up to speed.
3. Fees may be net neutral if guests spend less on property to make their trips fit within budgets – look at the data around customer sentiment, spend, and card abandonment.

So, what is the best way to handle these fees? Should they be included in the rate? Or should they be displayed separately? There is no easy answer. But there are three things to consider when making this decision.

• Consider your market. In some markets, it is standard to include all fees in the rate. In other markets, it is more common to display the base rate and then list the additional fees separately.

• Is your price competitive? Often including rates in the fee will make you less competitive on price.

• Don’t be petty – tacking on small fees can make guests feel nickel and dimed.