Meeting Mentor Magazine

December 2018

5 Steps to Take

Negotiating Tactics Help Counter
Mounting Hotel Fees and Surcharges

Hotels are ratcheting up extra fees and laying new surcharges on both meeting guests and meeting professionals, even as the seller’s market shows no signs of abating. So the time to sharpen your negotiating skills is well before contracts are signed (see tips below).

The numbers. Fees and surcharges collected by U.S. hotels will top $2.47 billion in 2015 (+5% over $2.35 billion in 2014), according to the annual report by Bjorn Hanson, Ph.D., clinical professor in the NYU School of Professional Studies, Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management. He attributes the increase to:
• 3% more occupied hotel rooms.
• More fees and surcharges assessed.
• Higher amounts charged.

Fees and surcharges, while 80 to 90 percent profitable, represent a small percentage of total U.S. hotel profits (about 3 percent of $66 billion in 2014). Still, they are important to hotels because there is no risk or investment associated with them, said Hanson.

The newest fees and surcharges for hotel guests include baggage holding, unattended parking, early check-in and guaranteeing a specific room type. The full list ranges from the resort or amenity fee to Internet, package delivery, and automatic gratuities.

The newest fees and surcharges for meeting groups include charges for bartenders and other event staff, special charges for meeting room setup and breakdown, and administrative fees for folio billing.

Even more problematic are “surprise” or “hidden” charges that often emerge after contracting. Example: “You put into the contract that there will be no meeting room rental charge for tabletop exhibits based on the size of your room block,” said Patty Kealy, director of global accounts/team director for ConferenceDirect. Down the line “you’re told that there’s a setup charge per tabletop.”

Expect to see more specialized fees and surcharges emerge, predicted Hanson. Recently Kealy has seen hotels attempt to assess mandatory porterage fees per room — a gratuity of $5 or $8 per day to cover bellman and housekeeper. The hotels tell her: “It is the group’s responsibility to inform the guest of this mandatory gratuity, and if the guest disputes or refuses it, the fee will be charged to the group master account.”

Even more surprising was the hotel chain that charged a “branding fee,” which was above and beyond banner hanging fees. Such branding fees just allow a group to hang sponsor posters and banners; any labor fees for the actual hanging are not included. While Kealy did negotiate down the charge, “I couldn’t get rid of it completely.”

Her clients will accept a resort fee that provides a lot of services, and they are open to adding it to the room rate. Hotels, however, fight this practice for a number of reasons, Hanson noted. It subjects the fee to occupancy taxes, room rates change frequently, and it impacts room rate search by travelers.

Some advice for meeting professionals who are wrestling with these fees first-hand:
1. Do not target only one hotel in your search and negotiations. “There has to be a back-up option to create competition,” Kealy said. “The hotel then has to work hard to get your business.”
2. Analyze the master bill from a previous meeting “Look at the ancillary charges to see what you’ll need to negotiate the next time you go to contract,” she advised.
3. Include a contract clause that fees (for hotel guests or the meeting group) not disclosed in the contract cannot be added later, Hanson emphasized. At the same time, Kealy noted, attach as an addendum the price list of the current fees.
4. Circle every item in the contract that appears to be a fee or surcharge, make a list and negotiate every one of them. “Out of a $100,000 meeting, $20,000 are not for room, food, beverage or meeting room revenue,” Hanson said. Taking those fees into account, the negotiated room rate turns out to be less competitive than it appeared.
5. Ask some attendees to alert you if unauthorized fees or charges appear on their folio, so that you can take action on everyone’s behalf. — Maxine Golding

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About ConferenceDirect
ConferenceDirect is a global meetings solutions company offering site selection/contract negotiation, conference management, housing & registration services, mobile app technology and strategic meetings management solutions. It provides expertise to 2,500 corporations and associations through our 325 Associates globally. www.conferencedirect.com

About MeetingMentor
MeetingMentor, the leading publication for senior meeting planners, is circulated to the clients, prospects and sales associates of ConferenceDirect, which books more than 3.87 million room nights. www.meetingmentormag.com

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