What is a destination fee and why are more hotels charging it?

My hotel bill for a three-night trip to New York City included 21 charges.

Nine were for “destination fees.”

There were three daily rates of almost $35 each, even though my third night was supposed to be “free”, plus separate sales and occupancy tax on each rate.

And that was just for one of our rooms, we booked two. In total, the fees were $240.

I read about “junk fees” in the hotel industry, how often expressed in terms such as “resort”, “destination” or even “hospitality” fees, which are on the rise (especially in North America) and they even received a mention in President Joe Biden’s State of the Union address this year.

But I had also read that hotel staff will waive them when pressed. I, however, was not so lucky at the end of my stay at Thompson Central Park New York, a Hyatt hotel. The reception staff insisted that the fees be paid.

In a written response to CNBC, Munir Salem, manager of Thompson Central Park, said: “Like many hotels in the area, Thompson Central Park includes a daily destination fee to provide guests with services, activities and other benefits we believe that guests will enjoy.” enjoy.”

The hotel’s website says that their “destination rates” provide services like:

• premium internet access
• Access to a gym
• Business concierge services
• newspapers on demand
• One bottle of water per guest at check-in

Those are all things I assumed would come with my reservation, especially since entry-level rates regularly top $500 a night.

There is more. Fares also come with discounts: one free hour on a bike rental (with one paid hour), 6% discount on The New York Sightseeing Pass, 8% discount on a hop-on hop-off bus tour, and “exclusive access to 20% “discount tickets” to the zoo – all the good stuff, but nothing I would want or use.

In the competitive luxury hospitality industry, where operators strive for flawless stays and rave reviews online, fee-based hotels risk leaving guests feeling cheated just before they walk out the door.

But the reason is not surprising.

“It’s very lucrative,” Rafat Ali, CEO and founder of travel media company Skift, told CNBC. Estimates from the Federal Trade Commission show that consumers paid about $2 billion in hotel rates before the pandemic, and mandatory rates have increased since then.

Ali said hotels hope the mandatory fees will eventually normalize, similar to how baggage fees are now an accepted cost of flying. But it’s never going to happen, she said.

“This was the argument they made all along, which is: If I’m not going to check baggage, why should I pay for it as part of the package?” he said. “In hotels, that doesn’t work because… you’re not disaggregating anything, you’re just adding this, and there’s no way to opt out.”

On August 1 on Skift’s website, Ali wrote an open letter to the travel industry with a message: “You will not win this ‘junk fare’ fight.”

The reason, he said, is that even in a partisan world, everyone dislikes these fees.

In March, the Junk Fee Prevention Act was introduced in the US Senate to eliminate “excessive, hidden, and unnecessary fees” and require full costs to be clearly displayed “when the price is first displayed.” time to a consumer”.

In July, a bipartisan bill introduced in the US Senate specifically targeted fees in the hotel industry. The bill, the Hotel Rate Transparency Law, prohibits hotels from announcing rates without mandatory rates.

Ali said that whether or not the bills pass, he believes they put public pressure on companies to act, similar, he added, to how the Biden Administration targeted airlines that charge families for sit together. United, American, and Frontier soon changed their policies.

On August 10, the Texas Attorney General sued Booking Holdings, which operates popular booking sites like Booking.com, Priceline, Agoda and Kayak, for deceptive business practices, targeting companies that advertise a rate and then add mandatory fees. . the purchase process.

Costume addresses this practice, known as drip pricing, calling it an illegal “bait-and-switch tactic” that leads more consumers to make purchases because they don’t notice the new rates or because they grudgingly accept the rates on the listing page. final reservation: by a reluctance to start the process over.

Pennsylvania filed a similar complaint against Marriott International Inc. In April 2023, the hotel chain agreed to pay Pennsylvania $225,000 for failing to meet the terms of the agreed settlement, which required Marriott to clearly post room rates and mandatory fees.

Salem of Thompson Central Park told CNBC that his “Direct booking channels fully disclose room rates and any fees to guests throughout the reservation process.”

I checked that and indeed the hotel website includes the $35 fee in the total cost. Searches on Booking.com and Expedia showed the same thing. Maybe I should have expected the fees after all?

But the problem is that I didn’t book online; I booked over the phone (my family needs connecting rooms, which is a problem in itself). Also, when we checked in, the hotel was unable to locate our reservation, which resulted in us having to negotiate a new reservation on the spot. During these discussions, we talked a lot about fees, but destination fees never came up.

In a statement in support of the Hotel Rate Transparency Act, American Hotel & Lodging Association President and CEO Chip Rogers said the bill “will create a single standard for mandatory rate display.” But even with transparent pricing, cases like mine could fail.

I wonder why hotels just don’t include these fees in the room rate? After all, the same guest who is fine with a $300 a night rate may refuse to pay $250 for a room and $50 for a “hospitality service fee.”

Several days into our stay, my husband and I, bent on principle at this point, called the hotel to dispute the rates. The representative said that he would remove the charges if we were members of the Hyatt loyalty program. We are not

But because of our check-in fiasco, we were told we were good candidates for fee waivers.

We hung up and waited, that was almost two months ago.

After weeks of silence, I finally called my credit card company to dispute the charges, as recommended in articles like this one, written by consumer advocate Christopher Elliott (who received the same baffling email I did, touting rates destination fee of “just $30” at a California hotel that “guests will love”).

Within minutes, my credit card company removed the charges. An email quickly confirmed this, saying: “Your dispute has been resolved.”

But victory was not the emotion he felt. Don’t get me wrong, I was glad to avoid the fees. But this was never about the money. It’s about the inherent unfairness of receiving a hotel bill made up of multiple charges you didn’t expect.