As hoteliers see some of the most improved market conditions in years, some say they're ready to try something new: straightforward pricing. But many meeting planners and consumers say they're being quietly dinged with surcharges—despite the fact that they're already paying higher room rates.
The reason for hotels' higher prices is simple: Demand for rooms is gaining on supply, says Dr. Bjorn Hanson, the global practice leader at Pricewaterhouse-Coopers' hospitality and leisure division in New York City. And heading into 2005, meeting planners will "see a noticeable increase in all rates, and during peak periods, dramatic increases. The annual average rate increase is around four percent, but planners looking for specific dates might see rates that are fifteen to twenty percent higher." So expect higher rates, in addition to costlier ancillary surcharges.
Hoteliers admit that they're trying to raise rates. "Demand for small meetings is going up in all the major markets," although the recovery is a little slower in secondary markets, says Joel Pyser, VP of field sales for Marriott. "When demand goes up, so does the room rate," he explains. "We're estimating about a three-percent increase in occupancy for next year, so I don't see rates going up big time, but we will see a three to five percent increase."
Pyser says that Marriott is moving away from surcharges and extra fees because the chain doesn't want to "nickel and dime customers," but planners working with a variety of hotel brands are reporting higher charges for meeting rooms, food and beverage, and other ancillary services and goods. "I've just received a hotel contract that states it collects a twenty-percent service charge on meeting room rental fees," says one planner. "I've never seen this before." Says another, "This is the first time I have ever seen this: 'An early arrival fee of fifty dollars will apply for any guest checking in prior to standard check-in time of three p.m.' "
Indeed, hotels will earn a record $1.4 billion on surcharges in 2004, says Hanson. The newest one he's seen: "A minibar restocking charge. You pay three-fifty for the soda, but because the attendant has to restock it, there's an additional charge of four ninety-five. That's a cute one."
Many hotel companies, including Starwood, Wyndham, Hilton, and Marriott, have faced litigation over undisclosed charges, but the fees remain commonplace. A contractual addendum prohibiting "additional mandatory charges" may be the only way for planners to stop such fees before they are applied.