Fees: A New Revenue Stream for Hotels?

Airlines are well-known for collecting fees: from changing a ticket, cancelation, baggage, selecting an exit-row seat, to carry-on luggage (by Spirit Airline only, at least for now). It seems that airlines can charge flyers almost anything they want. In 2009, the airline industry collected $7.8 billion revenue because of fees, a 42% increase from 2008. Decades ago, hotels “learned” from the airline industry about revenue management. This time, will hotels follow the airline industry again and start charging guests extra fees to boost their bottom line?

An NYU hospitality professor Bjorn Hanson expected revenues of hotel surcharges will increase from 2009’s $1.55 billion to this year’s $1.7 billion. Joseph McInerney, chief executive of AH&LA agreed to the increasing trend but estimated that such increase will not take place until 2011. Surcharge fees may vary city-to-city and property-to-property, some of the “normal” hotel fees include:

· Internet access: $9.95 to $19.95 per day.
· Room service and tray charges: $2.50 to $5.95.
· Mini bar restocking fees: $2.95 to $5.95 a day.
· Fees for cancellation or no-show: one night’s room rate.
· Luggage: $1 or more a piece.


On the other hand, some analysts disagreed with Hanson’s estimation. According to Henry Harteveldt in Forrester Research, consumers may not be able to choose their fly carriers because many airlines only fly to limited destinations. However, consumers can easily find another hotel on the next corner. Southwest Airlines set a good example for not imposing baggage fees --- it increased its market share by $1 billion a year.

Fees or no fees for hotels? What is your opinion?

References:
NYTimes.com: http://tinyurl.com/linchikwok05042010
USAToday.com: http://tinyurl.com/linchikwok05042010-2
Picture was downloaded from: http://tinyurl.com/linchikwok05042010P

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