Smart SpendingSmart Spending

Hotels rake in $1.8 billion in fees

That's a record high, according to a new study. Hotels love fees because they're often 80% to 90% profit.

By MSN Money Partner Sep 26, 2011 1:19PM

This post comes from Jeanine Skowronski at partner site MainStreet.

 

Airlines are notorious for turning a hefty profit off of fees and surcharges, but a new study reports that hotels are also guilty of adding on extra charges.

 

Total fees and surcharges collected by U.S. hotels are expected to increase to a record $1.8 billion in 2011, up from $1.7 billion in 2010, according to researchers at New York University.

 

Bjorn Hanson, divisional dean, said in a press release that this year's increase can be attributed to both a 4% to 5% uptick in hotel occupancies, plus new or higher fees and surcharges being added on at many hotels, particularly resorts.

According to the study, fees at hotels have increased every year since 1997, when amenity fees became an industry standard, with the exception of periods following 2001 and 2008 when lodging demand declined. In 2000, the first year an analysis was conducted, NYU researchers estimated hotels made $1.2 billion off of fees and surcharges.

 

Hanson said the fees are a particularly lucrative source of income for hotels because they are 80% to 90% profit. Post continues after video.

The estimates are based on selected interviews with industry executives and corporate travel executives, analysis of industry financial data, and information available on hotel and brand websites.

 

Examples of lodging fees include resort or amenity fees, early departure fees, reservation cancellation fees, Internet fees, telephone call surcharges, the costs of local calls, business center fees (i.e., cost of sending/receiving faxes and sending/receiving overnight packages), room service delivery surcharges, mini-bar restocking fees, charges for in-room safes and automatic gratuities.

 

Despite the steady uptick, fees associated with lodging are still dwarfed by those you'll incur when flying to your travel destination. In June, the Department of Transportation released data reporting that airlines make $3.4 billion on baggage fees alone.

 

Of course, with the costs associated with travel increasing on all fronts, it's no wonder more consumers are choosing to travel by car and rent a place to stay in lieu of traditional accommodations, industry experts say.

 

More on MSN Money:

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

ABOUT SMART SPENDING

Smart Spending brings you the best money-saving tips from MSN Money and the rest of the Web. Join the conversation on Facebook and follow us on Twitter.

VIDEO ON MSN MONEY

TOOLS

More