ANYTHING YOU CAN DO Hotels play ancillary revenue catch-up
Posted on 09/10/2015
The travelling public has been bashing the airline industry for years as it has systematically upped the ante on the ancillary revenue front. With ultra low cost carriers (something Canadians are still denied) like Spirit and Ryanair the angst is frankly unfair, as things like baggage fees are an optional extra on their extremely low basic fares.
Not so with legacy and ‘new-legacy’ carriers like Air Canada and WestJet, where the checked bag fees were simply tacked on to their existing high fares. The latter has openly boasted about how it has picked the pockets of its passengers to the tune of more than $100 million from checked baggage fees last year.
While airlines have been drawing the flack, the hotel industry has started to quietly get into the ancillary game - or perhaps that should be ‘get back’ into the game. After all, paying $25 for a checked bag is not nearly as outrageous as the usurious sums one used to be charged for making a two-minute domestic call on a bedside telephone. Like so many other things, the cell phone shut down that little goldmine although it did open a few other portals at the same time with WiFi fees being one of the bigger ones.
While airlines still struggle to grow their paid WiFi uptake – maybe because the fees seem to keep going up – on the ground WiFi is now free in an ever-increasing range of locations including most major airports. In the hotel world however it is still a pretty unfathomable picture, especially when one can expect to pay a fee for WiFi at a luxury property but usually get it for free at a no-name motel.
Why? Well, as Toni Repetti, a hotel management professor at the University of Nevada Las Vegas, says, "The easy answer to that is - because they can."
When they’re paying $500 a night – or more accurately, their companies are paying it – then it’s like taking candy from a baby. On the other hand when you’re competing with the $79-a-night hostelry next-door, ‘Free WiFi’ on the flashing neon sign outside can be a game changer.
But WiFi is just the tip of the ancillaryberg.
A few of the more popular/unpopular little extras that have started sneaking onto hotel bills in recent years are:
• Resort Fees – Ever notice that $25-a-night charge for a whole bunch of ‘resorty’ stuff like tennis courts and a beach that you didn’t even lay eyes on? Some properties will even discretely list local phone calls and newspapers among their resort fee perks. In other words that ‘free’ newspaper just cost you 25 bucks!
• Safe Fees – This is for the privilege of having that safe in your closet that in all your travels you have never once used. If you ever wondered why it’s there, you probably didn’t notice that sneaky little $2.50-a-night fee. In a 400-room hotel with an 80% occupancy that’s a very safe $300,000-a-year!
• Airport Shuttle Fee – The assumption is that these are free right? Well t’ain’t necessarily so: I was whacked with a $5.00 shuttle fee just recently. When I spotted it at checkout and challenged it, I was blithely told, “Oh we’ve been charging for that for a couple of years now.” So, silly me, my mistake! It was reversed out.
• Early/Late Check In/Out Fees – That, “Oh great you have a room ready” moment at 10 am in Europe after an overnight flight can be seriously dampened when you are told that there is a sizable fee for being granted access to it. This opens a huge can of worms as to the hotel industry’s 20-hour day (check-out by 11:00/check in from 3:00) but I’ll save that for another day.
• Groundskeeping Fees – A poor man’s Resort Fee for those properties with more acres of sprinklered lawn than amenities. Watch for this one in drought-stricken areas where attempting to maintain that lush green look comes at a lot of green.
• Off site parking fees, specific room type surcharges (king versus two queens etc.) and yes, baggage fees for a few hours storage after that 11:00 checkout are all slowly edging into the new ‘what price hospitality?’ norm.
According to a recent Trend Analysis Report by the Tisch Center for Hospitality and Tourism the US hotel industry’s revenue from fees and surcharges has almost doubled over the last ten years from $1.2 billion to $2.35 billion.
While this may pale in comparison to the $6.4 billion in bag fee revenue alone collected by US carriers last year, the die is cast. So whether you are buying or selling a hotel night or an airline ticket just be sure to pay attention to the small print – ‘there’s gold in them thar bills.’