U.S. Lodging Industry Fees and Surcharges Forecast to Increase to a New Record Level in 2013 – $2.1 Billion
 
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U.S. Lodging Industry Fees and Surcharges Forecast to Increase to a New Record Level in 2013 – $2.1 Billion

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TREND ANALYSIS REPORT
August 13, 2013


By Bjorn Hanson, Ph.D., Divisional Dean
Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management
NYU School of Continuing and Professional Studies (NYU-SCPS)

Following the 2012 record of $2.0 billion, total fees and surcharges collected by U.S. hotels will increase to a new record level of $2.1 billion in 2013.

The increase for 2013 reflects a combination of approximately 2.25 percent more occupied hotel rooms than in 2012, more fees and surcharges, and higher amounts charged at many hotels for a total increase of approximately 6.0 percent.

Fees and surcharges emerged as a common industry practice in 1997 with resort fees, one of which was called an “amenities tariff”.  Energy surcharges were widely introduced in 2000.

U.S. lodging industry fees and surcharges have increased every year except for brief periods following 2001 and 2008 when lodging demand declined.  Although the lodging industry initiated fees and surcharges as a common practice before the airline industry, the airline industry collects significantly more than the lodging industry, approximately 10 times more.

Examples of fees and surcharges include: resort or amenity fees, early departure fees, early reservation cancellation fees, internet fees, telephone call surcharges, business center fees (i.e. charges for receiving faxes and sending/receiving overnight packages), room service delivery surcharges, mini-bar restocking fees, charges for in-room safes, and automatic gratuities and surcharges.  For groups, there have been increased charges for bartenders and other staff at events;  special charges for set-up and breakdown of meeting rooms; fees for master folio billing; and baggage holding fees for guests leaving luggage with bell staff after checking out of a hotel but before departure.

A new emerging fee is for suburban and airport hotels and resorts to charge for open, unattended parking.  Some hotels have added this charge with no operational changes, while some have added one or more electronic key card operated gates for entry and exit.

Fees and surcharges are highly profitable; most have incremental profitability of 80 to 90 percent or more of the amounts collected.

The estimated amounts of fees and surcharges collected are summarized below:

Year

Amount (in billions)

2013

$2.1 (forecast)

2012

  2.0

2011

  1.85

2010

  1.7

2009

  1.55

2008

  1.75

2007

  1.75

2006

  1.6

2005

  1.4

2004

  1.2

2003

  1.0

2002

  0.55

2001

  1.0

2000

  1.2


These amounts are estimated based on selected interviews with industry executives and corporate travel executives, analysis of industry financial data, press releases, and information available on hotel and brand websites.

EDITORS:
To interview Dr. Bjorn Hanson about this research or for more information, please contact Cheryl Feliciano at Cheryl.Feliciano@nyu.edu or 212-992-9103 or Suzanne Dawson at sdawson@lakpr.com or 212-329-1420.

About the Author

Bjorn Hanson, Ph.D., is divisional dean of the NYU-SCPS Preston Robert Tisch Center for Hospitality, Tourism, and Sports Management. He is a hospitality and travel researcher, widely respected for his industry forecasts and for having created econometric models that transformed business analysis in the field. Prior to joining NYU-SCPS, he held the position of global industry leader, hospitality and leisure, at PricewaterhouseCoopers LLP. 

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