The New York Times – The airlines have been doing it. Expect the hotels to follow suit.
Over the last few years, the airlines have been adding and increasing fees on checked bags, exit row seats and more, much to the benefit of their bottom lines. And for similar reasons, hotels are likely to add more fees and more stringently enforce or even raise existing charges for cutting a stay short, for example, or for storing luggage.
A new study by Bjorn Hanson, clinical professor at the Preston Robert Tisch Center for Hospitality Tourism and Sports Management at New York University, found that while total fees and surcharges collected by hotels in the United States declined to $1.55 billion in last year’s faltering economy, they will rise this year. Mr. Hanson said he expected hotel surcharges to climb back up to $1.7 billion this year as a result of an expected rise of 3 to 4 percent in occupied hotel rooms, broader adoption of fees and more aggressive enforcement of and increases in existing fees.
The fees and surcharges were initially charged by high-end hotel brands in the late 1990s for access to resort amenities like the swimming pool, putting greens and tennis courts.
Imposed generally today on a selective, property-by-property — rather than chainwide — basis, fees of $9.95 to $19.95 a day are now charged on Internet access, Mr. Hanson said. He said fees for room service and tray charges range from $2.50 to $5.95 (added to an automatic gratuity), and he estimated minibar restocking fees at $2.95 to $5.95 a day, once the first item is removed. In addition, he said, the fee for cutting short a stay or canceling a reservation without adequate notice is typically the cost of one night’s accommodations. For storing your luggage, a hotel might charge $1 a bag or more, he said.
Fees have “become more accepted as part of the travel experience,” Mr. Hanson said. With travel demand starting to rise, he added, “this gives hotels greater confidence to apply and enforce fees.”
Henry H. Harteveldt, travel analyst for Forrester Research, was not as optimistic as Mr. Hanson about the ability of hotels to collect fees in the near future.
“While business travel is better than it has been, it’s still being managed very carefully,” Mr. Harteveldt said. “And business travelers’ brand loyalty has declined. They’re open to changing hotels if they don’t feel they’re getting good value.”
He noted the assertion by Gary C. Kelly, the chairman and chief executive of Southwest Airlines, that the carrier had increased its annual market share by $1 billion, mostly by not imposing baggage-checking fees. “Business travelers don’t like fees,” Mr. Harteveldt said. “Southwest has gained market share in part because it’s perceived as not ripping customers off.”
But Michael W. McCormick, executive director of the National Business Travel Association, a trade group for corporate travel managers and suppliers, said that he expected hotel surcharges would climb and proliferate over the next year or so.
“Hotels have a modest ability now to increase their average daily rate, but they can increase their bottom line by trying to institute more add-on, ancillary fees,” he said. “That seems to be where the travel industry is going.”
Mr. Hanson noted that the fees and surcharges were highly profitable for hotels, as they were for airlines. He estimated the additional revenue from hotel fees and surcharges at typically 80 to 90 percent profit.
Although all hotel chains contacted about Mr. Hanson’s research either had no comment or declined to answer specific questions, executives of travel management companies — including American Express, Carlson Wagonlit Travel, Hogg Robinson Group, Egencia and Ovation Travel Management — generally agreed with his forecast of surcharge increases in 2010. All also said some fees, especially those for Internet access and early checkout, could be negotiated by corporate travel buyers with hotel companies.
Margaret Bowler, the Britain-based director of global hotel relations for Hogg Robinson Group, said she expected this year to be better than last, as more people travel and spend more money. “Because occupancies will go up, fees will naturally go up — to what level, I couldn’t tell you,” she said.
But she argued that “there’s a big difference between hotels and airlines” imposing surcharges. “There’s a hotel on every corner, but a limited number of airlines flying a limited number of routes,” she said. “If one of the big hotel guys does something, others may follow, but an independent hotel may not. And a corporation might choose the independent hotel because it wants the best price and savings.”
Joseph A. McInerney, chief executive of the American Hotel and Lodging Association, a hotel industry trade group, said Mr. Hanson’s forecast was “right on, but he’s about six months ahead of himself.” Mr. McInerney said he “can see an increase in fees in 2011, when there’s less new product coming on.”
Jan-Philip Velders, an information technology specialist at the University of Amsterdam, said that as a business traveler he was turned off by hotel surcharges. An elite-level participant in the Hilton, Marriott and Starwood loyalty programs, he said he planned to attend a conference in June in Miami. Although the conference will be held at the Intercontinental Miami, he will stay at a Courtyard by Marriott a few blocks away, where the room rate is $50 cheaper a night and Internet access is free.
“The value for the dollar is higher at the Courtyard than at the Intercontinental,” he said.
One way to avoid Internet access fees is to participate in a loyalty program: Choice, Wyndham and Fairmont hotels offer free access to all participants in their programs, as does Hyatt to all elite participants in its program. Starwood and Hilton offer free access to select elite program members, as will Marriott as of Friday.
“There is some value to being a member of a loyalty program,” said Tim Winship, publisher of FrequentFlier.com. “But who thought airlines would charge for a seat in the exit row? Maybe there will be surcharges now for rooms according to how far they are from the ice machine or elevators. Creativity will be brought to bear.”
Get a room — the alternatives to hotels are endless Hotels aren’t faring well, but only partly because the recession has driven down rates. More travelers are branching out, turning to vacation rentals and cruises as options.
By Christopher Reynolds
The next time you see a hotel manager striding across the lobby with furrowed brow, look again. He may not be worrying about the guy in 415, the group in the banquet room, or even the recession that has driven room rates to their lowest levels in years.
Instead, he might be thinking about the likes of Carlos A. Hernandez of Los Angeles, who has decided he likes vacation rentals better than hotels. Or Robert Bell, a retired airline pilot in Long Beach, who has been won over by cruises.
“I guess I’ve had my fill of hotel rooms,” said Bell, 73, who’s planning another cruise this fall.
Amid all the distress wrought by the recession, this is also a moment of rare opportunity for consumers confident enough to take vacations. They can take advantage of depressed hotel rates, which are still lower than last year even in the midst of the spring vacation season. Or, like Hernandez and Bell, they can look beyond hotels.
And if they do, will they ever look back?
“We’re in the midst of a structural change,” said Henry H. Harteveldt, a vice president and travel industry analyst for Cambridge, Mass.-based Forrester Research. “The consumer is not going to go back to thinking, ‘The only place I can sleep tonight is a hotel.’ “
Industry experts cite many factors in the 18-month hotel slump, beginning with unemployment rates, a collapse in the number of business-group bookings, and generally depressed business travel, which is key to the profitability of many hotels.
Given that, some say Harteveldt is overstating the effect of vacation alternatives on the hotel business. But experts do acknowledge the increasing clout and deep price-cutting of the cruise industry, which now has room for more overnight guests than all of the hotels in Manhattan and San Francisco combined.
And travelers say the Internet has made rental homes, apartments, condos, bed-and-breakfasts and time-share units easier to research, made home-exchange matches easier, and made spare bedrooms and couches easier to wangle — perhaps from friends and family, perhaps from strangers found on websites such as couchsurfing.org or airbnb.com.
The cumulative growth of these scattered alternatives is impossible to measure precisely — many couch-surfers, after all, are sleeping for free. But given the attention these alternatives have been gaining, Harteveldt said, “if I were the president of the American Hotel and Lodging Assn., I’d shudder.”
No, says Joseph A. McInerney, president and chief executive of that Washington-based association, he’s not shuddering. He doesn’t see this as a game-changing moment. But he does see a crowded marketplace.
“There are so many new ships out there, and so many new distribution channels online, and more condominiums in the rental pools,” McInerney said.
In January, hotel occupancy nationwide sank to 45.1%, the lowest figure for that month in the 23 years that industry analyst Smith Travel Research, or STR, has been gathering numbers. Though occupancy has started to increase since then, room rates nationwide were still dropping as recently as February.
In February 2008, STR statistics show, the average San Francisco hotel room cost $170.40, the average Manhattan room $254.95. In February 2010, the San Francisco room was $135.13, the Manhattan room $199.65.
Jan Freitag, vice president of global development at STR, said he expects hotel rates nationwide to keep falling for a few more months before leveling off. By the second half of this year, he said, hotel rates will begin climbing again.
But the lingering recession and expanding Internet have opened many leisure travelers to hotel alternatives.
From the start of 2000 until the end of 2009, the North American cruise industry floated 118 new ships, pushing its capacity to more than 285,000 passengers.
Though prices have edged upward in recent months, Caribbean and Mexican Riviera cruises are still offered for as little as $70 per person per day, meals and entertainment included — a number that catches the eye, even if you’re a cruise skeptic.
Bell, the retired airline pilot, used to count himself as one of those. Then in 2008, some friends talked him into trying his first cruise. He and his companion, Diane Callie, joined them on a seven-day Mexican Riviera itinerary, then signed on for a 10-day eastern Caribbean cruise last year. This year, maybe the St. Lawrence River in Canada. “The nice thing about a cruise is you can go from place to place and you don’t have to pack and unpack each time you go,” Bell said.
Ada Brown, owner of Seaside Travel in Long Beach, said she’s noted many such conversions. While many hotel executives accept 45% vacancy rates because they’re fearful of damaging their brands with price-slashing, the cruise lines “do whatever is necessary to fill those ships,” she said. Perhaps as a result, “the cruise market is replacing hotels to some degree.”
Meanwhile, on land, vacation rentals have been getting more attention, too, in part because the Web is soothing travelers’ apprehensions.
For decades, the trouble with renting a home, condo or apartment was that travelers couldn’t be sure what they would find. Now, though vacation rentals still come nowhere near the consistency of a hotel brand, the advent of detailed Internet listings — and guest reviews — has eased many vacationers’ qualms.
Indeed, a 2009 study by research firm PhoCusWright Inc. estimated the national home-rental market to be $24.3 billion yearly, about one-fifth the size of the U.S. lodging industry’s annual room revenue.
One key player is Vacation Rental by Owner, founded in 1995 to match travelers online with homeowners willing to rent out residences. It’s now part of HomeAway, an Austin, Texas-based company whose worldwide listings include more than 80,000 residences in the U.S. In February, HomeAway announced its ambitions by bankrolling a “Hotel Hell” Super Bowl commercial in which Chevy Chase and Beverly D’Angelo reprised their film roles as hapless travelers Clark and Ellen Griswold.
In recent months, Expedia’s popular Internet travel-search site TripAdvisor has launched flipkey.com, a site where homeowners worldwide can pay to have their rental listed and rated by guests.
For Carlos Hernandez, a 35-year-old educator at King Middle School in Los Angeles, the “transforming event” came when he stayed in a London flat with his cousin about five years ago. The experience made him feel so connected to the city, Hernandez said, that he started looking for chances to use apartments and guest houses instead of hotels. He has since done so in China and again in London.
“I wouldn’t want to experience a country any other way,” Hernandez said. “There’s something about getting a place off the beaten path. . . . When you shop for meals in a market, something in your brain turns on that doesn’t necessarily turn when you’re having dinner at a restaurant and ordering your food.”
Leanne and Cindy,
Thank you so much for recommending Goodgame Ranch – what a beautiful property… so comfortable, you made it feel like home from the moment we arrived.
We normally stay in the larger resort hotels – particularly Bacara in Santa Barbara; but your service has really changed that! We can’t wait for next time – there’s no place we’d rather stay.
Thank you again so much for a great memory!
We had a wonderful stay. The property is beautiful and so well maintained — probably one of the best homes I’ve rented.
Traveling doesn’t have to mean ruining dedicated diets or budgets
Budgeting for food expenditures during travel to any destination can be almost as difficult as forecasting the week’s weather. When staying at a traditional hotel, the challenge is multiplied as travelers face the added expense of dining out for breakfast, lunch and dinner. While the majority of quality hotels do not offer full kitchens, professionally managed vacation rentals allow guests to enjoy their favorite (and often healthier) meals and snacks, as each property provides a full kitchen stocked with clean utensils, pots, pans, plates and ample cabinet/refrigerator space for food storage.
“For my family, including grandkids, the best part of staying in a vacation rental was having breakfast in our jammies,” explains Kathy Ogden, a traveler from Clovis, Calif., who stayed with Monterey Bay Property Management. “We loved the freedom to have meals at our leisure and have home-cooked meals instead of dining out.”
Often costing less than a single hotel room, vacation rentals afford travelers an accommodations lifestyle unlike any other, providing considerably more space (both for living and dining), amenities, guest services and privacy than other, more traditional lodging options. For answers to common questions, along with additional tips and tools for choosing a rental that fits travelers’ needs and budgets, visit Discover Vacation Homes.
Dining on a Dime
The average daily cost for lunch at a full-service restaurant for a family of four is approximately $40.00; dinner prices can jump as much as $6/person totaling $64/day. As the majority of traditional hotels do not offer in-room kitchens or adequate amounts of pantry space, many families are forced to dine out for all three meals per day. Access to a full kitchen adds up to major savings throughout trips of any duration – For example, enjoying cereal for breakfast or sandwiches for lunch, rather than a full-scale restaurant meal, can save enough for additional activities, a nice night out, or more!
Sticking to a Healthy Living Meal Plan
While on vacation, travelers can easily consume more than 4,000 calories a day, translating into an average 5-pound weight gain for a one-week trip. With an in-home kitchen, vacation rental guests are no longer slaves to fast food or other high fat dining options, but are now back in control of their personal menu, allowing them to cook their food, shop for healthy snacks and accurately monitor their caloric intake.
A Chef Just for You
Some professional vacation rental management companiesoffer personal chef services, catering to travelers whose idea of a vacation may be far away from the kitchen. During their stay, trained chefs are available to prepare a romantic dinner for two or an entire family. Chefs may even cook up to one week’s meals in advance, ready in the refrigerator or freezer upon guests’ arrivals. All entrees are customized for guests’ nutritional goals or restrictions.
I apologize for the delay in response, I have been on business travel the past couple of weeks. Oh, how I wish I could be back soaking in the hot tub at Rancho Maroma at this moment!
I would describe our stay at Rancho Maroma as magical. It was a surprise 40th anniversary trip for my parents and they were blown away to the point of tears when we arrived. We hit great weather and spent the bulk of the weekend around the pool enjoying the majestic views and incredible sunsets. The property exceeded our wildest expectations, we never wanted to leave. We did manage to pull ourselves away from the house and pool and get out to visit Los Olivos and the surrounding area for a great meal and fun wine tasting. Thank you for a truly amazing experience. We would love to rent the property again (and again, and again) and have recommended Santa Ynez Vacation Rentals to ALL of our friends and family.
Thank you! We had a wonderful time. It was a fantastic property – truly lovely. A perfect escape from our wonderful, and busy, life with three small children. We will definitely be coming back.
Thank you again,
We had a wonderful time at Oak Valley Ranch this weekend. The owners have created a truly grand residence in a spectacular setting. Our family enjoyed a memorable weekend here, and we hope to return again soon. We have not a single complaint, and we thank you, your company and the owners for making this wonderful home available to us over the weekend.
Bob, Suzanne and family
We absolutely loved the Villa, it was perfect, even if the weather wasn’t. We love to cook, and appreciated the quality knives and cookware, as well as the rosemary and lavender in the garden. The house was spotlessly clean, and all the details were great, the flowers, herbs, things in the fridge and the toiletries.
We look forward to staying there again,
Christopher A Hinckley, Ph.D
Here are some fun pictures from this weekend…(I am the one with the veil). We had so much fun. The last picture is the as we were waiting for the wine tasting tour (The Grapevine) to pick us up….