Category Archives: Travel Tips

Fee-fi-fo-fum: hotel surcharges approach $2 billion

If you’ve found yourself fuming over fees and surcharges on your recent hotel bills, there’s good news and bad news.

The bad news is that fees for Internet access, fitness centers and other amenities continue to rise. According to Bjorn Hanson, who tracks hotel fees as divisional dean at the Tisch Center at New York University, U.S. hotels are set to take in an estimated $1.95 billion in 2012, an increase of 5.4 percent over last year.

The good news? They may not go much higher as hotels run out of new things to charge for — at least for now.


“The list of fees now being charged is pretty long,” said Hanson, “so there aren’t a lot of opportunities to create new fees and surcharges.”

Instead, says Hanson, the bulk of this year’s $100-million increase is a natural consequence of more people traveling — average occupancies at U.S. hotels are up 3.5 percent over last year — and more hotels are climbing aboard the fee and surcharge gravy train.

The latter development is borne out by the latest data from the American Hotel Lodging Association (AHLA). According to the trade group’s 2012 survey of more than 52,000 hotel properties, 23 percent now charge for in-room Internet access, compared to 19 percent in 2010. During the same period, the number of hotels charging a fee to use fitness facilities climbed from 21 to 25 percent.

(On a happier note, the survey also notes that fewer hotels are charging for pets or assessing resort fees.)

Not surprisingly, perhaps, guests find fees for Internet access among the most infuriating. “Expectations over Internet access are being set by other industries,” said Jessica McGregor, senior account manager at J.D. Power and Associates. “You go to a coffee shop or restaurant and, oftentimes, the Wi-Fi is free. Paying for it at a hotel goes against what people have come to expect.”

And they’re none too happy about it. According to the company’s latest survey on hotel guest satisfaction, released in July, guests who received complimentary Internet access reported an average score of 764 (on a 1,000-point scale) versus 688 for those who were charged a fee.

The 76-point gap isn’t surprising, perhaps, but as McGregor notes, it’s up 16 basis points (26 percent) from the year before. Even so, and despite that rising ire, hotels are likely to continue charging such fees, she says, viewing them as “a necessary evil” that helps them stay profitable.

In fact, says Hanson, the industry’s current profitability may be exactly what’s stopping hotels from implementing more new fees. 

“The industry is achieving very favorable average daily rate increases,” he told NBC News. “When that becomes a challenge, then they might turn to increasing fees and surcharges.”

Rob Lovitt is a longtime travel writer who still believes the journey is as important as the destination. Follow him on Twitter.

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High bid wins: Airlines offer free access to eBay

The great shopping mall in the sky is getting bigger — by about 300 million items — but you won’t find them in the SkyMall catalog or on the duty-free cart.

Instead, fliers on Delta Air Lines and Virgin America can now use the inflight Wi-Fi provided by Gogo to get free access to eBay, the online auction site, any time they’re above 10,000 feet.


“(We) recently launched our new multimedia platform that offers passengers access to numerous activities, including online shopping, gaming and (movies), said Ash ElDifrawi, Gogo’s chief marketing officer, via e-mail. “Offering access to eBay definitely fits with this mission.”

The service is the latest addition to the growing list of Gogo partnerships that spare airborne Internet users the usual cost of going online, which typically runs $5–$15 per day, depending on the carrier and type of device used. Other retailers offering free inflight access on select airlines include Amazon, Zappos and StubHub, the event ticket-seller.

“Broadening the retail offer is good for everyone in the ‘mall,’” said Jay Sorensen, president of IdeaWorks, which tracks airlines’ ancillary revenues. “Every mall seeks anchor tenants and eBay certainly qualifies as that.”

At the same time, expanding free access to another popular site may be the carrot that entices travelers reluctant to pay for the service to stick around. It’s currently estimated that just 7 to 10 percent of fliers on Wi-Fi-equipped planes take advantage of the service.

“The resistance isn’t necessarily the price; it’s the value proposition,” said Norm Rose, president of Travel Tech Consulting. “If the No. 1 thing you want to do is stream movies over Netflix, it can be a miserable experience.”

But according to Rose, the so-called “take rate” will inevitably improve as download speeds increase, more people carry web-enabled devices and providers get more creative with other promotional deals. Whether it’s tiered access — free or discounted Wi-Fi for members of an airline’s loyalty program, for example — or additional sponsorships by other retailers, it’s likely that more people will decide they want to shop ‘til they drop (below 10,000 feet).

“You’ve got a captive audience,” Rose told NBC News. “All the things that people now do online are going to get transferred to the inflight experience.”

Rob Lovitt is a longtime travel writer who still believes the journey is as important as the destination. Follow him on Twitter.

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IKEA plans to build a budget hotel chain in Europe

Olivier Pon / Reuters

IKEA has plans to get into the budget hotel business.

 

STOCKHOLM – IKEA, best known as the world’s largest furniture retailer, plans to build a budget hotel chain across Europe, following a trend for cheap-but-cool accommodations driven by increasingly price-conscious business travelers. 

The 100 hotels, which will not feature IKEA’s eponymous flat-pack furniture nor its brand name, represent the company’s biggest real estate development to date.

Demand for stylish yet affordable rooms from austerity-hit business guests and leisure travelers is high and growing, according to Harald Muller, senior executive at the property unit of Inter IKEA, the company that owns the IKEA brand and concept.

” ‘Budget designer hotels’ is today the fastest developing hotel segment,” he said.

Motel One, citizenM and BB Hotels are all part of a new breed challenging established budget brands such as Travelodge, Whitbread’s Premier Inn and Accor’s Formule 1.

IKEA’s first hotel will most likely open in Germany in 2014 and the chain will be run by an international hotel operator, Muller said.

“There is no IKEA furniture in it,” Muller said. “It is not an IKEA hotel. It’s a continuation of our normal investment activities in real estate.”

Inter IKEA already owns a few hotels and has more in the works, but the new project would be its first chain and will top its 26-acre home, office and hotel scheme around the Olympic park in London.

Inter IKEA is identifying and buying sites for future hotels in the chain, which will be launched in Belgium, Austria, the Netherlands, Scandinavia, Britain and Eastern European countries like Poland.

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William Shatner character returns from the dead

The Priceline Negotiator is back.

You may recall that William Shatner’s popular TV pitchman was supposedly killed off seven months ago in a fiery bus crash, but now he’s mysteriously returned in a new commercial airing this week.

In the new spot, Shatner’s character resurfaces on a beach with a surfboard under his arm. 

“You’ve been busy for a dead man,” a man dressed in a suit tells Mr. Negotiator. “After you jumped ship in Bangkok, I thought I’d lost you.”

“Surfing is my life now,” replies Shatner’s character, who tells the world that Priceline has “even faster, easier ways to save you money.”

When Priceline killed off the Negotiator in January, “we really weren’t sure which direction our advertising was going to go in,” said spokesman Brian Ek.

But in the past month, he said, Priceline has introduced a new product called Express Deals. Here’s how it works: Priceline shares information about a hotel’s star level, neighborhood and amenities along with a specially discounted price, but doesn’t give the name of the hotel until the customer books. 

Shatner’s character “very much fits the negotiating theme, so it makes sense to incorporate him again,” Ek said. 

“He has a lot of fans out there.”

The new ad from the Butler, Shine, Stern Partners agency doesn’t address how the Negotiator survived, but Shatner, 81, told The Associated Press his preferred fantasy: “A beautiful girl gave me mouth-to-mouth resuscitation.” 

This is not the first time a Shatner character has died in the line of duty. Capt. Kirk, played memorably by Shatner in the “Star Trek” series, met his demise in the 1994 movie “Star Trek: Generations.”

Unlike Priceline Negotiator, however, Capt. Kirk has yet to come back from the dead.

Do you like the Priceline Negotiator TV ads? Tell us about it on Facebook.

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Fare or not? Spirit sued over fee

In the court of public opinion, the jury is still out on à la carte fees — some folks hate them, others are just resigned to them — but now the issue is going to federal court.

Last week, attorneys filed a class-action suit against Spirit Airlines over the carrier’s Passenger Usage Fee (PUF), a charge of $9–$17 per flight incurred by anyone buying a ticket over the phone or on Spirit.com. Considering that the vast majority of travelers purchase their tickets by those means, the case argues that the charge isn’t an optional fee at all.


“It’s a fare, not a fee,” said Katherine Ezell, a lawyer with Podhurst Orseck in Miami. “Under DOT (Department of Transportation) regulations, you can’t charge a fee for something that is basically a fare.”

The suit covers the period between 2008 and 2011, a timeframe in which the airline earned approximately $142 million from the fee, according to an analysis by NerdWallet.com. At a minimum, some 5 million people have likely paid it, says Ezell, who believes the number could climb as high as 30 to 40 million.

The crux of the issue is what constitutes “optional.” Consider a recent search for a one-way fare from Chicago to Fort Lauderdale, Fla., in mid-September. The results returned an equation that looked like this:

               Our Price             +              Government’s Cut           =              Total Price
               $64.43                  +              $14.36                               =               $78.79

Clicking on the “Base Fare” icon under Our Price reveals a further breakdown as follows:

Flight: $45.58
Unintended Consequences of DOT Regulations: $1.86
Passenger Usage Fee: $16.99

(For those who are curious, “Government’s Cut” is merely Spirit-ese for the mandatory fees and taxes imposed by Washington, which the carrier helpfully calculates as “your government tax rate” – in this case, 22 percent.)

So, is the PUF optional or not? At the bottom of the page, users will see a note that says “Lower fares generally available at the airport,” which Ezell argues doesn’t make the practice any less deceptive.

“Theoretically, you can waste gas, drive to the airport, pay to park, go in and purchase your ticket and not pay it,” she told NBC News. “But they’ve always made a practice of encouraging people to use their website where you can’t avoid it.”

Others point out that the fee is not only optional — inconveniently optional, perhaps, but an option nonetheless — but that it’s also included in the total price, making the issue more or less moot.

“If you’re a consumer, you aren’t going to see this added on after the fact,” said Brett Snyder, who blogs about travel at CrankyFlier.com. “It will be in the total price so it really is a non-issue.”

Spirit, meanwhile, “believes the claims are without merit and intends to defend the case,” said spokesperson Misty Pinson.

This, of course, is not the first time Spirit has been cited for its interpretation of government regulations. In 2009, the carrier was fined $375,000 for multiple violations, including omitting optional fees; in 2011, it was fined $50,000 for deceptive advertising, and in March of this year, a lawsuit was filed in Illinois claiming that the Unintended Consequences fee noted above violated the state’s consumer-fraud laws.

As for the issue of whether the PUF is a fare or a fee, whether it’s optional or not and what constitutes adequate disclosure, resolution will have to wait on the courts. In the meantime, full fare transparency will likely remain a goal rather than a reality.

“Oftentimes and even with the new DOT regulations, fees are still fairly hidden,” said Alicia Jao, vice president of travel media for NerdWallet. “There isn’t enough transparency over airline fees and consumers are being charged more than they should be because they’re unaware.”

Rob Lovitt is a longtime travel writer who still believes the journey is as important as the destination. Follow him on Twitter.

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