What are destination fees and why are more hotels charging them?

My hotel bill from my three-night trip to New York included 21 charges.

Nine were for “assignment fees.”

There was a three-day charge of about $35 each—even though my third night was “free”—with separate sales and lodging taxes for each charge.

And that was just for one of our rooms – we booked two. Total charges were $240.

I’ve read about “garbage fees” in the hotel industry—often referred to as “resort,” “destination,” or even “hotel service”—that they’re on the rise (especially in North America), and that even President Joe Biden this year They were mentioned in the State of the Union Address.

But I’d also like to read that hotel staff will give them up when they’re pressed. But at the end of my stay at Thompson Central Park New York, a Hyatt hotel, I had no such luck. The front desk staff insisted on payment of fees.

Munir Salem, manager of Thompson Central Park, said in a written response to CNBC: “Like many hotels in the region, Thompson Central Park includes a daily destination fee to provide guests with amenities, activities and other benefits that we believe guests will enjoy.”

The hotel’s website says its “destination fees” include:

• Premium internet access
• Access to the fitness center
• Concierge business services
• Newspapers on request
• One bottle of water per guest upon check-in

These are all things I assumed would come with my booking, especially since entry-level rates routinely exceed $500 per night.

There are more. Fees also provide discounts: a free hour on bike rental (with one paid hour), 6% off The New York Pass for sightseeing, 8% off a hop-on hop-off bus tour and “20% off exclusive access” zoo tickets – all nice things, but nothing I’d want or use.

In the competitive luxury hospitality industry — where operators strive for flawlessness and glowing online reviews — fee-based hotels run the risk of dazzling guests before they even walk out the door.

But the reason is not surprising.

“It’s very profitable,” Rafat Ali, CEO and founder of travel media company Skift, told CNBC. Federal Trade Commission estimates show that consumers paid nearly $2 billion in hotel fees before the pandemic, and mandatory fees have increased since then.

According to Ali, hotels hope that mandatory fees will eventually be normalized, as will baggage fees when flying. But that will never happen, he said.

“That’s the argument they’ve always made, which is: If I’m not checking a bag, why should I pay for it as part of the package?” he said. “It doesn’t work in hotels because … you’re not taking anything away, you’re just adding it — and there’s no way to opt out.”

On Aug. 1, Ali wrote an open letter to the travel industry on Skift’s website: “You will not win this ‘garbage fee’ battle.”

The reason, he said, is that even in a partisan world, not everyone likes these rights.

It was introduced in the US Senate last March to eliminate “excessive, hidden and unnecessary charges” and to require total costs to be clearly displayed “when a price is first shown to the consumer.”

A bipartisan bill introduced in the US Senate in July specifically targeted fees in the hotel industry. The bill, the Hotel Fee Transparency Act, prohibits hotels from advertising rates without mandatory fees.

Ali said he believes the bills are putting public pressure on companies to act, whether they pass or not — similar to how the Biden Administration has targeted airlines that force families to sit together, he added. United, American and Frontier soon changed their policies.

On August 10, the Texas Attorney General sued Booking Holdings, which operates popular booking sites such as Booking.com, Priceline, Agoda and Kayak, for deceptive trade practices, targeting companies that advertised a rate and then imposed mandatory fees. purchase process.

Suit addresses this practice, known as drip pricing, and calls it an illegal “bait and switch tactic” that causes more consumers to shop either because they don’t see the new fees or because they don’t want the fees on the final booking page — from not wanting to start the process again.

Pennsylvania v. Marriott International Inc. filed a similar complaint. In April 2023, the hotel chain agreed to pay Pennsylvania $225,000 for failing to comply with agreed settlement terms.

Thompson of Central Park, Salem, told CNBC that this “Direct booking channels fully disclose room rates and any fees to guests throughout the booking process.”

I checked it out and indeed the $35 fee on the hotel website is included in the total cost. Searches on Booking.com and Expedia also showed this. Maybe I should have waited for the payments after all?

But the problem is that I didn’t order online; I booked by phone (my family needs connecting rooms which is a problem for itself). Additionally, the hotel was unable to find our reservation when we checked in, which resulted in us having to negotiate a new reservation on the spot. During these discussions, we talked a lot about rates, but destination fees never came up.

In a statement supporting the Hotel Fee Transparency Act, Chip Rogers, president and CEO of the American Hotel and Hospitality Association, said the bill would “create a uniform standard for the disclosure of mandatory fees.” But even with transparent pricing, cases like mine can slip.

I wonder why hotels don’t just include these charges in the room rate. After all, the same guest at $300 per night can avoid paying $250 for a room and $50 for a “hospitality service fee.”

A few days into our stay, my husband and I – basically hellbent on principle at this point – called the hotel to dispute the charges. The rep said he would take the charges if we were members of the Hyatt loyalty program. We are not.

But due to the registration fiasco, we were told we were a good candidate to waive the fees.

We hung up and waited—that was almost two months ago.

After a week of silence, I finally called my credit card company to dispute the charges, as recommended by articles like this one by consumer advocate Christopher Elliott (who received the same confusing email I did, stating the “only $30” destination fee). in a California hotel that “guests will really love”.

Within minutes, my credit card company removed the charges. The email quickly confirmed this, noting: “Your dispute has been resolved.”

But victory was not the emotion I felt. Don’t get me wrong – I was happy to avoid the fees. But it was never about money. It speaks to the inherent unfairness of being presented with a hotel bill with multiple charges you didn’t see coming.