Fee to hold your airline reservation for a few days: $20. Peak air-travel surcharge: $47. Rental car GPS: $13 a day. Beach chaise longue: $20 a day. Resort fee: $25 a day.
Your carefully planned vacation budget? Out the window.
We have all learned by now that the travel industry loves a surcharge, and most of us have adapted. But as I peruse some of my latest bills, the a la carte add-ons feel like things that ought to be included in the basic price, sneaky ways to pluck a few more dollars from my pocket.
In the last few months I’ve unwittingly paid for newspapers plopped outside my hotel-room door and rental-car fees with vague, perplexing names like “airport concession recovery” and “facility charge.” And I have been taken aback by fees for hotel beach chairs, umbrellas and parking. These were on top of fees I knowingly paid for: preferred seating on planes, in-flight Internet, changing tickets and printing boarding passes.
There are now charges for reservations, cancellations, boarding early, departing early, holding bags, checking bags, and using the gym, the business center and the safe in your hotel. And thanks to the latest high-tech minibars, you cannot even touch an Almond Joy to read the calorie count without a charge on your bill (along with a “restocking” fee).
Some fees are mandatory; you must factor them into your budget. Others are optional. And then there are the charges you can opt out of — if you can figure out that you’ve been billed for them.
A record $1.85 billion in fees and surcharges was collected last year for hotels alone (up from $1.2 billion in 2000), according to Bjorn Hanson, divisional dean of the Tisch Center for Hospitality, Tourism and Sports Management at New York University. He expects that figure to climb to $1.95 billion in 2012.
Airlines, meanwhile, collected more than $3.3 billion in baggage fees and more than $2.3 billion in cancellation and change fees last year, according to the Bureau of Transportation Statistics. Rental car companies and cruise ships also take a share, with extra charges for child seats, navigation systems, certain onboard snacks, activities and excursions.
“There is this increasing feeling of a shakedown,” said Jonathan Turley, who, as an expert on constitutional and tort law, frequently travels for work. Turley said he actually laughed during a recent visit to a high-end hotel when he was told that it would cost him $15 a day for Wi-Fi. “Then you go across town to the Days Inn and they have Wi-Fi for free,” he said. “As someone who teaches law and economics you expect to have some predictable market response to this need, and it’s actually flipped. You get a higher level of these services at lower-end hotels.”
And don’t get him started about plane tickets, which he likens to tickets at Disney World. “You pay this upfront cost, but then you find out that everything in the park is designed to eke out a little bit more of your money,” said Turley, 51, who thinks the travel industry is actively trying to lower expectations by charging separately for even the most basic services.
Added fees and surcharges emerged as an industry practice in the late 1990s with resort fees that claimed to be for things like beach towels and housekeeping, then spread to airlines, cruise lines and car rental companies. Hotel fees are highly profitable and, according to Hanson, have increased every year except for the periods following the economic downturns in 2001 and 2008 when lodging demand declined.
Fees continue to give airlines a boost. Fuel surcharges have risen nearly twice as fast as oil prices since April 2011, according to a study by Carlson Wagonlit Travel, a travel management company.
Even cruise lines are adding fees, among them Carnival Cruises, which is in the midst of a pilot program that, for $49.95, will allow everyone in your stateroom to board early.
Yet many obligatory charges are easy to miss and hard to understand. In January, Transportation Department regulations took effect requiring airlines and ticket agents to “include all mandatory taxes and fees in published airfares.” Baggage fees must also be disclosed.
In July, the department fined Travelocity $180,000 for violating the rule “by failing to include fuel surcharges and other fees in advertised airfares.” That same month the department fined TripAdvisor $80,000.
And a class-action lawsuit was recently filed in federal court, claiming that up until late last year, Spirit Airlines actively misrepresented fares by unbundling certain fees, including something it calls a “passenger usage fee” that can be avoided only by purchasing tickets at Spirit’s airport counters.
Hotels are also coming under fire. When visiting the Hilton Garden Inn Sonoma County Airport last year, Rodney Harmon received a copy of USA Today that he claims not to have wanted or read, yet he was charged 75 cents. A class-action lawsuit was filed on behalf of Harmon and other guests who, according to the lawsuit, have “unwittingly purchased newspapers they reasonably believed and understood to be without charge” because the fee was printed inside the paper room-card holder in “extremely small font which is difficult to notice or read.”
Despite lawsuits and customer complaints, fees continue to pop up on bills, and they are becoming increasingly harder to withdraw. “The hotels have become very good at responding to guest complaints,” said Hanson, also the founder and former leader of the global hospitality and leisure industry practice for PricewaterhouseCoopers. “The idea is not to say ‘No,’ but the answer is ‘No.’ ”
Disappointing customers is a risky move, though. People who feel duped are more angry and less likely to return, according to research by Vicki Morwitz, a marketing professor at New York University Stern School of Business who has studied consumer responses to what’s known as drip pricing by airlines and rental car agencies. “You can’t win over a consumer by misleading a consumer,” she said. “You’re going to lose by negative word of mouth.”
Even the name of a fee matters, which is why consumer psychologists think companies devise vague names like “service charge” and “resort fee.”
“It makes it a little more palatable,” said Ravi Dhar, director of the Center for Customer Insights at the Yale School of Management and a psychology professor at Yale, explaining that a resort fee suggests you are getting something above and beyond a mere hotel experience.
The size of the fee is also significant. If it is a small percentage of the base price, psychologically it doesn’t matter, he said. He cited the $2.50 fee he recently incurred on top of a $90 Broadway show ticket. But the bigger the ratio, the bigger the annoyance.
Transparency is essential, too. Did the hotel or airline clearly state the charges upfront or did consumers perceive the charges as deceptive? “If they know what these charges are upfront and they walk into it with their eyes open, they feel a lot better,” said Angela Y. Lee, a marketing professor at the Kellogg School of Management at Northwestern University.
Some experts contend there is an upside to all these fees. Consumers who choose not to pay a fee for a carry-on or to buy a bag of peanuts aren’t subsidizing those passengers who clog the overhead bins and don’t bring their own snacks.
But when a standard airplane seat is so small and uncomfortable that anyone a little taller or heavier than average has to pay for a seat with more legroom just to get through the flight, that fee seems unfair.
Indeed, for many passengers, being nickeled-and-dimed diminishes the joy of the journey.
Fees and workarounds
Read the fine print when making reservations, especially when using online travel companies like Hotwire and Travelocity. While some fees are optional, they might be for things you want. Here’s how to get them for less.
• On airplanes, wear your necessities: Scottevest’s Transformer Jacket ($160) has 20 pockets designed to accommodate your water bottle, iPad, camera. There are even pockets through which you can control your iPhone. Or buy what you need (sunscreen, umbrella, sweatshirt) at your destination.
• New Transportation Department regulations enable passengers to cancel a reservation without penalty up to 24 hours after it is made, as long as the reservation is made at least a week before the flight’s departure. And sometimes it’s cheaper to buy a new ticket than to change one.
• For rental cars, bring your own car seat, which airlines often gate-check free. Use an iPhone or an app for navigation.
• Buy beach chairs and umbrellas at a local drugstore, or pack an old sheet and use it as a beach blanket. Make another guest’s day by giving away the gear when you leave.
• If the airport rental car “concession recovery fee” is more than a shuttle or taxi ride to another location, rent the car at a nonairport location.
• Hotels that charge for Wi-Fi in the rooms sometimes provide it free in public spaces. Take your work to the lobby or pool, even a nearby coffee shop.