Hilton hotel adds surcharge for using a credit card — Will this become a trend?
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Editor’s note: After publication of this story, Hilton updated its statement to TPG to say that “Credit card surcharges are not aligned with Hilton’s enterprise brand standards. We are addressing this particular situation with the independently owned and operated property in question.”
A funny thing happened to TPG readers Isaac Burgin and Kendra Wallace during recent stays at the Hilton Burlington Lake Champlain in Vermont: Both were charged a “credit card surcharge tax” every time they swiped their cards to pay for hotel charges.
The surcharge tax was particularly galling to Wallace, who has Hilton Diamond elite status — and paid the hotel bill with her Hilton Honors American Express Card. As you can see below, she was charged 32 cents, $1.99 and 19 cents during her overnight stay.
Burgin stayed at the property June 24 – 26 and had surcharges tacked onto his bill. When he raised the issue of the surcharge with the hotel, he was told that “they were justifying it as a cost recovery while calling it a tax,” which he felt might not be appropriate or legal. “I then filed a complaint with Hilton’s corporate office,” he said. “I did receive a call from the hotel, again trying to justify the fee. After a long, unpleasant conversation, they did promise to waive the fee — while insisting they had every right to do so. I found this appalling and a poor business practice. which I conveyed to both the hotel and Hilton.”
In a statement to TPG, a Hilton spokesperson said “Hilton properties must adhere to brand standards pertaining to fees charged to the customer and clearly disclose any charges to a customer before being incurred. Hilton may grant exceptions in some cases to those standards, for example in regions where it is customary for such fees to be charged across all industries. In all cases, when charging such fees, Hilton hotels must comply with state and local laws. We are reviewing this specific instance with the independently owned and operated hotel.”
These types of surcharges, hidden fees and resort fees have long been anathema for TPG, which has written extensively about these practices. We’ve noticed more businesses tacking on credit card surcharges and in the COVID-19 era, a pandemic recovery fee. These fees and surcharges are being used as businesses make a grab for additional revenue to make up for pandemic-related losses.
Card issuers including American Express, Mastercard and Visa charge merchants a fee every time a customer uses their credit card to pay for goods and services. They add up to around 1.3%-3.5% of a total transaction. Back in March 2021, Visa and Mastercard announced that they would delay increasing merchant fees for another year due to the ongoing effects of the pandemic, Bloomberg reported. Despite this change, more businesses have tacked on these fees as they continue to recover from the effects of the COVID-19 pandemic.
There are only four states and one territory — Colorado, Kansas, Massachusetts, Connecticut and Puerto Rico — that explicitly make it illegal to impose an extra fee for using a credit card.
Visa requires all businesses that impose a card surcharge to give consumers written notice of it at least 30 days in advance. All of the card networks cap surcharges at 4% of the transaction — meaning that merchants can’t use surcharges for profit. Instead, they can only recoup baseline costs.
It’s perfectly understandable that struggling businesses feel the need to pass on additional costs that they are also faced with. But at the same time, these questionable surcharges can also hurt sales and leave a bad impression on consumers like Wallace and Burgin. It has become normal to see city and state taxes, along with marketing fees — and those annoying resort fees — on a hotel bill. But slipping in an undisclosed surcharge for using a credit card, especially as many hotels have gone to cashless operations, seems to be a practice that’s penny wise and pound foolish. It’s not good business to antagonize the customers you need to keep the doors open.
Featured photo by Antonio Guillem/Shutterstock
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