Mandatory Facilities Fee: A Growing Deceptive Trend in Lodging?

have long been adamantly against the policy of hotel and resort properties imposing mandatory resort fees to the room rate of a hotel, citing that if a guest is required to pay that fee anyway, it should be included in the room rate.

Why Resort Fees are Unfair to Consumers

Although the resort fee may be clearly disclosed during the process of booking a reservation for a room at a hotel or resort property — which is certainly legal — the room rate is often advertised without including the mandatory resort fee, usually causing comparisons of the total cost of staying in a room for one night between different hotel properties to be significantly more difficult for the consumer, as illustrated in what was posted by FlyerTalk member architect1337 in a discussion called The Dreaded and Despised Resort Fee:

Makes it difficult to do comparisons between suppliers.

X provides a service for Y$
Z provides a service for Y+$10

X charges a $25 resort fee. Z doesn’t. You don’t get to see this until you check out. You initially chose X because all things equal, you thought X was cheaper. It wasn’t.

Z decides to reduce it’s price by $20 but charge a $30 resort fee. Who is cheaper now? (don’t worry – it’s not a trick question). This then becomes doubly difficult when talking about airlines….

Mandatory Facilities Fee: A Growing Deceptive Trend in Lodging?

FlyerTalk members are now griping about something called a mandatory facilities fee, which is basically the same charge as a resort fee — except it is imposed at a hotel property which is not a resort; and a list of these hotel properties are being compiled in the WikiPost of this discussion.

As with resort fees, some of the services included as part of the facilities fee usually are already available to guests who have earned elite level status in a frequent guest loyalty program — such as free access to the Internet or bottles of water…

…and some of the services offered are those which you might not use during your stay. This could include a discount off of admission to a nearby attraction or facsimile — or fax — services. With the widespread proliferation of mobile telephones, offering local and long-distance telephone calls as included in a facilities fee is basically useless to most guests.

The facilities fee is a relatively new idea for generating revenue for a hotel property which is not considered a resort and therefore theoretically technically cannot use the moniker resort fee; but it has been around for at least three years. As I first reported in this article on Sunday, December 9, 2012, the Le Parker Méridien hotel in New York has announced that it will implement a mandatory daily facilities charge of ten dollars per day effective as of Tuesday, January 1, 2013. At that time, this fee — which has since increased by 50 percent to $15.00 per day — included the following:

  • Wired or wireless high-speed Internet access for multi-devices in guest rooms, the lobby, restaurants and the bar — although Internet access does not apply to meeting rooms or pre-function areas
  • Unlimited use of gravity fitness center
  • Unlimited use of the penthouse pool
  • Unlimited toll free and local calls from your in-room phone

Reasons Why What is Included in a Facilities Fee is Often Superfluous

I had some issues with what was included in the facilities fee…

  • High-speed Internet access has slowly become a complimentary benefit in facilities throughout the travel industry — not to mention that it is already free of charge for elite members of many frequent guest loyalty programs
  • Not everyone finds the use of a fitness center appealing or has time to use the hotel pool — regardless of whether or not it is located in the penthouse; so why impose a mandatory charge on hotel guests who will not use it?
  • Unlimited toll free and local calls from your in-room phone is useless for those people who carry a mobile telephone — which is just about everyone these days

Why Add a Facilities Fee? It May Not Solely Be For Additional Revenue

Do not forget that by charging undisclosed mandatory daily resort or facilities fees in addition to the room rate, travel agents potentially will not receive a commission on the fees — and you potentially will not earn frequent guest loyalty program points on what you paid in fees. We are talking about potentially free and clear profit for the hotel property — and I am uncertain at this time as to how a resort fee or a facilities fee affects the taxable income a hotel property is required to pay. Are facilities fees and resort fees a source of revenue which is tax exempt?

Hotel properties should be required to disclose all mandatory taxes and fees and include them in the room rate, as required of airlines in the United States as of January of 2012 with regard to fuel surcharges and carrier-imposed fees. This will give the customer more of an advantage to fairly compare room rates at competing hotel properties before deciding to book a reservation. It is a waste of time for the customer to have to investigate every single room rate to find out what is the absolute true total cost.

What You Can Do

Consider doing the following to help end this deceptive and sneaky practice of hotel properties charging undisclosed mandatory fees:

  • Boycott hotel properties which impose undisclosed mandatory fees to its guests. Hit them where it hurts — in terms of reduced revenue. Vote with your feet and choose an alternate hotel property, if available.
  • Alert the Federal Trade Commission of the United States of this practice by filing a complaint when reporting hotel properties such as the Le Parker Méridien in New York.
  • Spread the word about these rogue hotel properties and their unfair policies to family, friends and colleagues. Encourage them to join you in the boycott, file complaints to the Federal Trade Commission of the United States, and spread the word to their families, friends and colleagues.
  • Help me compile a list of hotel properties here to fight mandatory resort fees and mandatory facilities fees so that you have a quick and convenient resource as to which hotel and resort properties to avoid

Summary

I have no problem with hotel properties charging fees in order to increase revenue and cover costs — and, dare I say, even profit from it — as long as disclosure of those fees are as clear and as easy to find throughout the entire reservation booking process as possible, and as long as the fees are “unbundled” from the room rate for optional amenities and services. For example, if use of the hotel pool now costs ten dollars per day instead of including it in the room rate, impose it as an optional charge and reduce the mandatory room rate by ten dollars per day. This is fair, as only those who use the pool will pay the fee.

If Le Parker Méridien and other hotels really need that extra revenue, then either include it in the room rate; or offer it as an optional fee. Either way, this must be clearly disclosed up front to the customer in an obvious manner. Until then, Le Parker Méridien — as well as other hotel properties which similarly charge undisclosed mandatory fees exclusive of the published room rate — you are not entitled to one single penny of my business until you stop and end this deceptive policy.

Photograph ©2015 by Brian Cohen.

10 thoughts on “Mandatory Facilities Fee: A Growing Deceptive Trend in Lodging?”

  1. GUWonder says:

    In some jurisdictions, there would be ways for hotel owners/operators to play tax games by way of a “facilities” surcharge, more so if the “facilities” surcharge revenue was charged by and transferred to a hotel property owning trust or supposedly outside vendor. I’m not sure how many, if any hotels, have gone down that creative way of using these “facility fees”, but the industry has its tax consultants and revenue-maximization advisors who aren’t beyond getting creative at making more of someone else’s money their own money, even if it can be seen as ripping off the US Treasury and consumers.

    I do recall that hotel owners learned a benefit of rolling properties into say a REIT was that REIT’s paid taxes from good years could be legitimately clawed back from the government for the REIT’s bad years. Not sure when, if, that tax game was closed, but some REITs really played that game rather well.

  2. Al says:

    Facility fees apply to award stays too. That’s a new revenue source for those hotels. If I am selecting a hotel for an award stay, I will definitely try to avoid hotels with such extra fees.

  3. Nick says:

    I believe, similar to airfare, that the total price should be the first advertised price. Disclosure is fine, but it should come in the form of a first advertised price point if it is in fact non-optional with the product to which the fee is tied.

    I also hold a similar opinion for cable, internet, and wireless providers that require non-government mandated fees to their service on a post-advertisement basis ($29.99/mo advertised, but doesn’t mention $1.99 service fee).

  4. GUWonder says:

    Are there any hotels/resorts in the EU that charge a mandatory resort/facilities fee that isn’t included in the first advertised price that is highlighted to a consumer booking such stays from the EU?

    The reason I ask is that I’ve never encountered a “resort”/”facilities fee” on any of my European vacations and I’m wondering if EU rules are the reason for this fee infection not hitting the European lodging scene the way it has hit the North American lodging scene.

    1. Brian Cohen says:

      That is a good question, GUWonder — which is why I stopped short of using the word worldwide in the article.

      Like you, I have been all over the world; and I am hard-pressed to think of any hotel or resort property anywhere outside of North America which charges a resort fee or facilities fee.

      I would not be surprised if European Union rules — and the laws of other global regions — prevent this phenomenon from occurring in the lodging industry outside of the United States.

  5. DaninMCI says:

    Good post and I agree. I can’t help compare this with rental car facility fees and how rental car companies advertise a low price but then add on all sorts of fees and taxes.

  6. The Park Central in SF (formerly the Westin Market St) just recently instituted a ridiculous $25/day facilities fee. I argued with the manager there several times until they agreed to waive the fee because every item listed was either free for ALL guests or included with my Platinum benefits. Including line items for things like “luggage storage” and “access to the fitness center” which were always free is both insulting and embarrassing for their marketing teams. Not only did they refund the $25/day, but they will never get my business again because this fee is forced upon people as opposed to being a bundled service option.

    1. Brian Cohen says:

      That is the only thing hotel management will understand in terms of eliminating a facilities fee or a resort fee, WanderingEntrepreneur — boycott the property.

      Loss of revenue — or a new law, which at this time is highly unlikely — is the only way this nonsense will stop.

  7. Steve says:

    If a hotel I stay in hits me with a mandatory facilities fee, they will get a default 1-Star rating from me on TripAdvisor thereby warning others of the deceptive practice. If it is mandatory, roll it in to the room price. Period.

  8. Kristine says:

    Just got slammed with $27 per day Facilities Fee at The New Yorker Hotel. On the reservation it doesn’t say the price of this unavoidable, just that individual properties may charge fees. This is the first time I have run into a mandatory, not optional fee that is not tied to a choice I made to use a particular service.
    When planning this NYC trip, several friends asked me why I wasn’t using AirBNB. Believe my I will consider it next time. In addition to wasting money, this surprise fee makes me feel deceived and stupid. It’s extremely disrespectful to the customer.

Leave a Reply

Your email address will not be published. Required fields are marked *