The Critical Points: First to go were airline cancellation fees, next should be hotel resort fees
This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.
In the airline world, fees have become big business. There are checked bag fees, carry-on bag fees, seat assignment fees, fees to print boarding passes, fees to talk to a person and even fees that provide no tangible benefit or service to customers. Think of close-in booking fees, for example, when you may be required to pay $75 or extra miles if you’re within 21 days of departure.
There are also change fees, cancellation fees and the complete forfeiture of certain basic economy tickets that don’t allow changes or refunds.
But this week, we saw the airline industry take a big step in the right direction when United announced it was getting rid of change fees.
For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.
These fees have always been a way for airlines to increase ancillary revenue. In addition to paying any difference in between your existing and new ticket, a change fee seemed particularly punitive.
But COVID-19 has turned the world upside down and diminished business for airlines and hotels to the point that customers need confidence they’ll be able to change plans without being punished, or they simply won’t book a trip at all.
United is the first major airline to make this pro-consumer move of permanently removing change fees — though who knows what the carrier’s policies will look like in five years. Also, Southwest has never had change fees, and would only charge travelers the fare difference.
So, if an airline can get rid of change fees, which serve no practical purpose and doesn’t provide any good or service, a hotel can get rid fo resort fees. Right?
Related: How to avoid resort fees
Imagine you go to the grocery store to buy a single $2.99 box of cereal. At the register, however, you notice $1 was added to your total. It’s listed as a “shopping cart fee” — so you politely tell the manager you didn’t use the shopping cart. The manager says the fee helps offset the cost of providing shopping carts for all customers and, sorry, that’s the policy whether you use a cart or not.
That’s essentially the same as a hotel resort fee: A mandatory charge, often poorly disclosed or not advertised, regardless of whether or not you use the amenities. In reality, it’s a way for hotels to increase cash flow while keeping published rates low. It’s taxed identically to the advertised room rate.
Resort fees, urban fees, season fees, membership fees, urban retreat fees and whatever else the industry will think to call them next need to go. Now. Continuing to charge resort fees at properties with diminished offerings because of COVID-19 is a new low in the resort fee saga.
Many beachfront and Las Vegas properties, for example, are still charging full resort fees, even though amenities such as the pool, kids club and fitness center have reduced hours or have closed altogether.
Because occupancy remains historically low, now is the perfect time for hotels to give travelers transparent rates, without any hidden fees.
Imagine the publicity boost a national hotel chain would receive if it eliminated resort fees in the name of fair and straightforward pricing. They can — and arguably should — raise average daily room rates to compensate for the lost resort fee, especially as demand increases. Ultimately, travelers should be able to clearly see the all-in rate for a hotel stay and determine if the product (and its amenities) are worth the price.
Related: The 10 most outrageous resort fees
Surely, if Las Vegas stopped advertising $30 room rates with a hidden $44 per night resort fee, and instead advertised a $60 per night all-in rate, there would be wins in terms of both booking and publicity.
Hotels will need to be creative to lure back travelers, and eliminating resort fees is a logical, pro-consumer move to show customers you want and value their business. One look at the positive press United received when it did away with change fees should tell you exactly how hungry the public is for the travel industry to adopt more consumer-friendly policies.
Hotels can build trust with guests and sell rooms for a fair rate without tacking on frustrating mandatory fees. In light of the pandemic, things that seemed improbable — or even impossible — six months ago are happening. If an airline like United can shed long-held fees in favor of flexibility and transparency, who’s to say a major hotel chain can’t do the same?
Featured image courtesy of Hoshino Resorts.
Welcome to The Points Guy!
WELCOME OFFER: 60,000 Points
TPG'S BONUS VALUATION*: $1,200
CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners
*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.
- Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
- 2X points on travel and dining at restaurants worldwide, eligible delivery services, takeout and dining out & 1 point per dollar spent on all other purchases.
- Get 25% more value when you redeem for travel through Chase Ultimate Rewards®. For example, 60,000 points are worth $750 toward travel.
- Get unlimited deliveries with a $0 delivery fee and reduced service fees on orders over $12 for a minimum of one year on qualifying food purchases with DashPass, DoorDash's subscription service. Activate by 12/31/21.
- Earn 2x total points on up to $1,000 in grocery store purchases per month from November 1, 2020 to April 30, 2021. Includes eligible pick-up and delivery services.