The Ever-changing World of Fees

By Jennifer Hill, CRME, Vice-President, Client Solutions at Kalibri Labs and Brian Hicks, Vice President, Global Revenue Strategy at IHG, members of HSMAI’s Revenue Optimization Advisory Board

On its monthly call in June, HSMAI’s Revenue Optimization Advisory Board (ROAB) discussed’s decision to charge commissions on resort fees — a conversation that was reversed in July when the company announced it was delaying implementation of the policy until January 2020. But then several other fee-related news stories popped up recently, including Marriott being sued by the city of Washington, D.C., for leveling deceptive charges, Expedia announcing that it would not charge resort fees, and Airbnb eliminating some guest fees — leading the ROAB to use its most recent call once again to discuss the changing world of fees.

These issued raised questions among ROAB members about the importance of transparency and the impact these developments will have on the industry, especially when the outcome of the lawsuit is not known and could set a new precedent. One ROAB member said that from a consumer standpoint, not putting fees in the upfront price seems to be a deceptive practice.

Another member pondered where most customers draw the line and would cancel a reservation when fits hit a certain limit. “I don’t know if, as an industry, we can point to data that says when the fees are 30 percent more or 40 percent more, what the threshold is,” the member said. “But there’s definitely folks that are sick looking at that data and it is making an impact.”

Another ROAB member said that he has not seen a lot of pushback on fees in guest surveys or on social media. “I’m sure that there’s some people who are deciding not to purchase this because of these fees, but they are certainly not complaining about it once they get there,” the member said. “If you’re upfront about it, if people are aware of it, if they’re not surprised when they get there, then they’re the one who made the choice to buy it, so they can’t really be mad about it once they’ve done that.”

One ROAB member brought up service fees, which differ from typical resort fees in that they go directly to staff or third-party employees, and noted that and other OTAs that may in the future charge commission on resort fees could see the commission as a service fee that they are entitled to. “A lot of it in the messaging has just gotten really commingled to where, from a hotelier’s point of view, we don’t know if we’re being punished or penalized for charging a fee to begin with,” the member said, “or a service charge just out of principle because we haven’t cut in a third-party [OTA] on that revenue.

“One thing I don’t think that third parties have done very well on is communicating what the endgame is,” the member continued. “Is that for them to make more money, do they feel like they’re shorted, or are they really just trying to improve the customer’s experience with transparency? It seems like a lot of the message that has come out from various partners or in lawsuits is that the intent is this pro-consumer standpoint, to punish hotels who are not transparent.”

Categories: Revenue Management, Channel Management
Insight Type: Articles