Hotels Consider Adding COVID-19 Surcharges

Hotels Consider Adding COVID-19 Surcharges


“Destination fees” have been one of the most annoying trends we’ve seen in the hotel industry in recent years. Well, get ready, because a COVID-19 fee or surcharge could be the next thing added to your hotel bill once travel resumes.

Hotels may add COVID-19 fees

Many hotel loyalty programs have private online communities they use to get feedback from customers. A reader shares with me that a major hotel group’s online community is asking members about how they’d feel if hotels would add COVID-19 fees to the cost of stays.

As it’s explained, the impact of COVID-19 is impacting the hotel business globally, so hotels and restaurants may institute new COVID-19 fees as they reopen, which are likely to be a percentage of the bill.

The representative from the hotel group confirms that they don’t have plans to move forward with this concept yet (I think “yet” is a key word here), they want to know how members would feel about this. As you’d expect, the response is almost universally negative.

What is a COVID-19 surcharge, anyway?

I don’t know of any hotels that have added these COVID-19 fees yet, but I suspect that if one major global hotel group endorses this concept, they could spread like wildfire.

I’ve seen some news stories about a limited number of restaurants adding COVID-19 surcharges, and the concept seems to be as follows:

  • Restaurants don’t want to permanently raise prices, but would prefer adding a temporary surcharge that can be adjusted
  • This is intended to reflect the increased costs of some goods, the challenges restaurants are having covering their expenses, dining capacity being limited, etc.
  • For restaurant surcharges that I’ve heard of, they haven’t been huge; we’re talking somewhere around 5%

I totally understand the challenge that restaurants face. Many restaurants are small businesses, and they’re in such a terrible spot right now (as are so many other industries). When we order food from restaurants for takeout I tip much more than I usually would, because I recognize the struggle and want to do what I can to support them.

However:

  • The challenge is that so many people are struggling right now, so raising prices while also trying to encourage a return to normal is challenging, since people don’t have as much disposable income as before
  • I understand the concept of costs increasing for restaurants, but there’s an element of supply and demand here; just because costs for restaurants are increasing doesn’t mean people are willing or able to pay more to get food from restaurants, because they have other options

I get the struggle, but this isn’t the way to go about it

I’m not a fan of COVID-19 surcharges in any form, but personally I think this is a particularly terrible idea for the hotel industry:

  • Unlike most restaurants, hotels already have dynamic pricing every night, so if they want to charge more they should just raise prices
  • The optics of this could be terrible, as guests want to be reassured that it’s safe to travel, and a fee related to COVID-19 sends exactly the opposite measure; should guests feel like they’re being charged a fee so the hotel is clean?
  • Beyond that, the hotel industry has a massive uphill battle in convincing people to travel again, and a surcharge related to the very reason people aren’t traveling sends the wrong message

Bottom line

Over the past few years we’ve seen a ton of hotels add resort and destination fees as a way of extracting extra revenue. To those hotels considering adding COVID-19 surcharges: don’t do it!

If you need to raise rates then raise rates, and let the market decide. But it’s a complete slap in the face to customers if you’re trying to get away with charging a hidden surcharge related to COVID-19, no matter how you market it.

How do you feel about the concept of hotels adding a COVID-19 fee when travel resumes?





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