COVID-19 surcharges are here, and may spread to travel

May 23, 2020

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The cost of doing business is going up in a COVID-19 world thanks to everything from additional PPE required to a meat shortage raising food prices.

The most notable example so far is a Japanese Steakhouse and Sushi Lounge in southern Missouri that added a COVID-19 surcharge to a receipt, which was promptly shared on Twitter:

Dentist offices are adding $10 surcharges to visits and hair salons have started adding a $3 sanitation charge. While its reasonable to expect the cost of business to go up, the practice of nickel-and-diming American consumers has never been a popular method with the public to raise prices. Much like resort fees, consumers would much rather see the entire cost of a good or service up front so they can make an informed decision about whether they are willing to pay.

Earlier this week, Gary Leff reported a third-party moderator in the Hyatt internal ‘influencers’ community asked for feedback on Hyatt instituting a COVID-19 surcharge on hotel stays. Hyatt has since said the moderator was not instructed to ask about that and “does not need a forum to confirm now is not the right time to institute new fees like this.” Notice the statement doesn’t say Hyatt won’t do it, but now is not the right time to do it.

The conversation about COVID-19 surcharges has likely already occurred at every major hotel and airline. My fear is we’d have another 9/11 fee: the $5.60 which is added to every one-way flight you book that is never going to go away and is simply passed on to consumers by the airlines.

While airlines are legally forced to show the entire price of a ticket up front, hotels are not and would likely not include any COVID-19 surcharges in advertised room rates.

Give all-in pricing

Airlines and hotels that need to raise prices because of what is required to garner supplies, clean or keep customers safe should simply increase their upfront prices:

  • Consumers are used to dynamic pricing in the travel industry and won’t recognize slight price increases to airfare or hotel rates.
  • Consumers deserve the prices advertised to be fair, transparent and all-inclusive so they can make accurate comparisons between providers.
  • Hotels and airlines need consumers to trust them and an additional fee won’t increase that trust, nor will bad press about the worst COVID-19 surcharge offenders that will undoubtedly come.
  • Opaquely increasing prices when your biggest problem right now is demand won’t stimulate more customers.
  • Requiring a COVID-19 surcharge suggests sanitation and keeping customers safe is only included in a product if I’m willing to pay an additional, not-advertised fee.
  • There are already multiple attorneys general investigating hotels for deceptive prices by charging resort fees and the momentum to pass legislation to outlaw these is ramping up year after year. Do hotels really want to fight additional legal challenges right now?

Bottom line

One hotel will be the first to think adding an additional fee and not including it in the advertised room rate is a good idea. Every hotel chain will watch to see how that is received, which is why consumers need to swiftly and loudly reject the idea and continue to demand fair and upfront pricing inclusive of an entire good or service. I’m empathetic to businesses with increased costs and am willing to pay a higher upfront, inclusive price.

Featured image by Igor Vershinksy / Getty Images.

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