Guests are willing to pay extra for more features, flexibility and control in their hotel stay when value is clearly communicated, according to hoteliers.
NASHVILLE, Tennessee—The list of ancillary charges at hotels is long and growing as guests are asked to pay above and beyond the room rate for added features, flexibility and control over their stay.
To charge more—and avoid guest ire and backlash—hotels have to give more, said a panel of hoteliers during “Fee for all: How hotels are maximizing ancillary charges” at the recent Hotel Data Conference.
That value proposition must be at the center of plans to add fees at any point of the booking process or stay, said Paul Mengacci, VP of finance and analytics at Prism Hotels & Resorts.
“What we’ve been seeing at our company over the years is an upward trend in resort fees … which are really an opportunity and very profitable. … We look for areas to capture items that guests deem valuable,” he said.
Then it becomes a case of communicating that value to guests, and that’s much easier to do when you have buy-in from your staff, particularly at the front desk, he said.
Mengacci cited a New York property that had introduced an urban resort fee and as a result was fielding complaints from guests at check-in. In that case, a front-desk employee told guests, “I don’t agree with (the fees), but that’s what I was told to do,” he said.
That told him “we may have a training issue here,” Mengacci said.
Planning and transparency
Ideally, guests should know about any ancillary fees ahead of arrival, said Linda Gulrajani, VP of revenue strategy and distribution at Marcus Hotels & Resorts.
“Our legal team is really strict in how we communicate resort fees,” she said. “We have it in the booking path everywhere we can have it, and are really upfront in how we disclose it.”
J.B. Cooke, director of analysis and underwriting at Ashford Inc., agreed that planning and transparency are critical. Ashford relies on guest-satisfaction surveys when considering new fees, he said.
“We don’t just roll out fees willy-nilly,” Cooke said. And when guests book, “they know the rate and the resort fee on top of it.”
An added touch at some hotels is to give guests a printed reminder at check-in that’s the size of a business card, which lists amenities and charges, Cooke said.
“Getting that card reminds me these are value-adds I’m receiving,” he said. “It does a lot for guest satisfaction.”
Hotels can be a little less obvious and upfront on fees such as parking, Cooke added.
“It’s easier to drive a higher rate there, whereas with resort fees, a customer can do the math and see what they’re paying,” he said.
The transparency dictated by distribution channels, such as online travel agencies, pushes hoteliers to do even more to communicate to guests the value of added fees, panelists said.
Not everyone in the industry sees it that way, though.
“Not all our competitors are as transparent as we want to be,” Cooke said, who added that ultimately can be a good thing. “Possibly people are going to competitor hotels that don’t have that transparency, and perhaps they’re not as satisfied with that hotel after.”
Guests have become accustomed to resort fees in resort destinations, Gulrajani said, though they’re less likely to expect or accept “urban resort fees” in places like New York City.
“Resort fees are here to stay,” she said. “From a consumer perspective, we’re past the complaining point (on that), and now it’s just acceptance … as long as (your property is) perceived as a resort.
“Now we’re seeing it in New York, and in a ton of other places they’re doing the urban fee. … The play there is getting (guests) to spend a little more on-property, giving them credit in the bar or restaurant. … But guests don’t love it; they don’t see the value.”
That and other fees require more of a selling point with guests, Gulrajani said.
A hotel that introduces a “sustainability fee,” for example, might face significant backlash from guests if there’s no explanation behind it, she said. At some point, “it kind of feels like nickel-and-diming,” she added.
But if a hotel has done its research and implemented a fee that makes sense for the property and the guests, it has to stand firm and be consistent in charging that fee, panelists said.
“You have to hold to resort fees as much as you can, with the exception of perhaps a customer service issue,” Mengacci said.
“Once guests start getting into ‘I didn’t use this’ or ‘I used this for 30 seconds,’ that can open a can of worms. You start to lose the integrity of the fee. Word will spread quickly among guests that it’s easy to waive the fee quickly with a wave of the hand.”
Groups and meetings
Where some flexibility may come into play is in negotiating with meeting planners for group business, panelists said.
“On the group side, most sophisticated meeting planners understand a cancellation fee is part of business,” Mengacci said.
But if a planner is getting pushback from a specific company not wanting to pay a fee, hoteliers can find ways to be flexible for the purpose of maintaining a good relationship.
“How do we get creative?” he said. “Maybe we waive a portion, or apply it to a future booking? … If you can help a meeting planner along the way, maybe you earn a little toward that loyalty.”
Gulrajani added that another issue is collecting on those fees.
“I don’t think it’s necessarily about being firm; it’s about having the right processes in place at your hotel,” she said. “Hotels that are lazy don’t charge for no-shows or cancellations. One, they don’t want to have that conversation with the guest, or it’s difficult to collect.”
The key to surmounting all of those obstacles and challenges is “managing guest expectations” from the beginning of the booking process, Mengacci said.