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Hilton hotel adds surcharge for using a credit card — Will this become a trend?

July 11, 2021
4 min read
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.

(Screenshot courtesy of Kendra Wallace)

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.”

(Photo by Getty Images)

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.

Related: You may have to pay a surcharge to use your credit card — here’s what to know

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.

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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.

Related: Credit card economics: A look at the fees that you rarely see

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 image by Shutterstock
Editorial disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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TPG Editor‘s Rating
Card Rating is based on the opinion of TPG‘s editors and is not influenced by the card issuer.
4 / 5
Go to review

Rewards Rate

10XEarn unlimited 10X miles on hotels and rental cars booked through Capital One Travel
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Why We Chose It

The Capital One Venture X card is one of the best all-round travel credit cards ever launched. Not only is it offering a tremendous welcome bonus, but cardholders can earn tons of miles on everyday spending and receive a 10,000-mile anniversary bonus to boot. Its annual fee is $395, but cardholders can count on up to $300 in statement credits toward travel booked through Capital One Travel each year and other valuable benefits like access to Priority Pass lounges and Capital One’s own growing family of airport lounges.

Pros

  • Excellent welcome offer worth 75,000 miles after you spend $4,000 on purchases in the first three months.
  • Up to $300 in annual travel statement credits toward bookings make through Capital One Travel.
  • 10,000 bonus miles (worth $100 toward travel) each account anniversary.

Cons

  • The $395 annual fee might be expensive for some, but this card’s benefits provide much more value than that.
  • If you don’t travel frequently, this might not be the best card for you.
  • Earn 75,000 bonus miles when you spend $4,000 on purchases in the first 3 months from account opening, equal to $750 in travel
  • Receive up to $300 back annually as statement credits for bookings through Capital One Travel, where you'll get Capital One's best prices on thousands of options
  • Get 10,000 bonus miles (equal to $100 towards travel) every year, starting on your first anniversary
  • Earn unlimited 10X miles on hotels and rental cars booked through Capital One Travel and 5X miles on flights booked through Capital One Travel
  • Earn unlimited 2X miles on all other purchases
  • Unlimited complimentary access for you and two guests to 1,300+ lounges, including Capital One Lounges and the Partner Lounge Network
  • Receive up to a $100 credit for Global Entry or TSA PreCheck®
  • Use your Venture X miles to easily cover travel expenses, including flights, hotels, rental cars and more—you can even transfer your miles to your choice of 15+ travel loyalty programs
  • Named editors' choice for "Best New Credit Card of 2021" by The Points Guy
  • Earn 10 miles per dollar when you book on Turo, the world's largest car sharing marketplace, through May 16, 2023