Meeting Mentor Magazine

June 2024

More to Come

Slower Rise in Hotel Fees Doesn’t Help
Groups in Continuing Seller’s Market

How much more slicing and dicing can hotels do with fees and surcharges? Actually, they can and will find more, according to Bjorn Hanson, Ph.D., clinical professor at the NYU School of Professional Studies Jonathan M. Tisch Center for Hospitality and Tourism, who recently released his annual report on the U.S. lodging industry’s fees and surcharges.

U.S. hotels brought in $2.45 billion in fees and surcharges in 2015, and Hanson projects that will rise to $2.55 billion in 2016. However, the percentage increase will be the lowest since 2009 (when U.S. hotels were in the throes of the Great Recession). That is partly due to a notable change in how hotels charge for high-speed Internet access, he noted. Still, these fees and surcharges remain “highly profitable,” at 80 to 90 percent of amounts collected.

“While most of the possible fees and surcharges have already been created,” he said, “I have to believe there will be new categories” in the future. “When I put out this report, people always contact me with new ones to include.” Indeed, Hanson predicts more “fine-tuning [by hotels] of the amounts of the various fees and surcharges, with the goal of increasing them to the point where they meet guest resistance.”

The list of standard fees and surcharges has indeed continued to grow — from resort or amenity fees to early departure fees, reservation cancellation, Internet fees, telephone call surcharges, business center fees, room service delivery surcharges, mini-bar restocking fees, charges for in-room safes, baggage holding fees, and charges for unattended parking. Meeting groups are seeing increased charges for bartenders and other staff, special charges for set-up and breakdown of meeting rooms, and administrative fees for master folio billing. Newer fees and surcharges showing up include a “guarantee” of a specific room type or a room on a high floor and early check-in.

Sellers still in charge. If a turning of the sustained seller’s market of the past six years is imminent, it’s not enough to make an appreciable dent in negotiations between meeting planners and venues. Occupancy last year was at its highest since 1984, Hanson cited. And while occupancy might finish 2016 slightly lower, that “balance of power” will remain with hotels. Meeting planners “will not have the negotiating strength for concessions and other accommodations,” he said.

A few months ago, STR and Tourism Economics projected flat occupancy — no growth — in 2017 for the U.S. hotel industry, just a small uptick in demand (+1.9%), and average daily rate (ADR) growth of +3.8% that is considerably more modest than previous years. Its newest outlook (released Sept. 7) further lowered next year’s forecast for occupancy (-0.3%), demand (+1.6%) and ADR (+3.1%). Meanwhile, CBRE Hotels’ Americas Research is tracking slowing revenue growth and significantly rising expenses for hotels. And PwC US is forecasting slower demand growth as supply increases, declining occupancy levels that are still near peak levels, and a slower pace to average daily rate increases.

The Center for Exhibition Industry Research’s CEIR Index is reporting a 1.6% gain for the exhibition industry in 2Q 2016 over the same period in 2015, following a strong 1Q 2016 gain of 2.6%. While the worst-performing sector in this latest quarter was attendance (down 0.2%), “I’m not  overly concerned,” said Brian Casey, CEM, CEIR president and CEO. The exhibition industry has now outperformed the macroeconomy for six quarters in a row, and sustained slow but positive growth for 24 consecutive quarters. CEIR forecasts the total Index for the exhibition market to rise 1.8% in 2016 and between 2.5% and 3% in 2017 and in 2018. — Maxine Golding


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About MeetingMentor
MeetingMentor, is a business journal for senior meeting planners that is distributed in print and digital editions to the clients, prospects, and associates of ConferenceDirect, which handles over 13,000 worldwide meetings, conventions, and incentives annually.

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