US businesses taking liberties with new post-pandemic fees

America Letter: In addition to rising room rates, hotels have been adding hidden extras

The hotel industry is just one sector where prices are rising. The average nightly charge in March was about $147 – up 40 per cent on the figure for the same period last year. Photograph: iStock

The hotel industry is just one sector where prices are rising. The average nightly charge in March was about $147 – up 40 per cent on the figure for the same period last year. Photograph: iStock

 

At the top of the menu in a restaurant in a busy part of Washington a message was set out for diners.

In addition to the usual charges, taxes and tips there would be a further 5 per cent added to the bill.

The additional fee was a Covid-19 surcharge or “recovery fee” to help the owners to get over losses incurred during the pandemic.

Representative groups have argued that safety measures restaurants had to put in place during the pandemic cost each business about $10,000 on average.

On top of any such Covid-related charges that a restaurant may levy, diners are also in many cases facing bills due to the soaring price of foodstuffs.

A report by the US department of agriculture last month warned Americans to be prepared to pay more for meat, chicken and eggs.

It forecast that the cost of eating out – what it described as food-away-from-home prices – were expected to increase by 5.5-6.5 per cent this year.

The report predicted that beef and veal prices would increase by between 6 and 7 per cent this year, with similar hikes expected in the price of poultry and eggs.

All-in-all these increases are feeding into the general inflation figure which was recorded at 8.3 per cent for April, slightly down on the 8.5 per cent in March. Inflation overall is running at levels not seen for 40 years.

The rising cost of living in the US poses arguably the greatest political threat to the administration of president Joe Biden with polls indicating the Republican Party is likely to take back control of the US congress in elections this November.

The administration had previously argued that the spike in inflation was temporary. However, last week the Federal Reserve raised interest rates by half a percentage point, the biggest hike in 22 years, indicating that it feared the problem was not transitory but in danger of becoming entrenched in the economy.

Further rises may be on the horizon this summer.

Prices at the pumps

The bellwether product in the US is, of course, gasoline. Prices at the pumps are now on average over $4.30 per gallon.

Democrats have argued the rising prices are due to market volatility following the Russian invasion of Ukraine, Republicans contend it is linked to Biden’s push to move towards green energy.

The administration, however, would seem to suspect that oil companies are profiteering or engaged in price gouging.

The president has accused “Big Oil” of enjoying record profits while Americans were paying high gasoline prices and said they should use these to produce more or restart idle wells rather than give money back to investors.

A search last week for hotels in a western state ahead of a forthcoming trip showed a another type of charge in the fine print – a `destination fee'

He has also pointed to large meat processors for the increase in the price of meat. The administration believes that the market is now concentrated in the hands of few very big players.

Another sector where prices are rising is the hotel industry. The average nightly charge in March was about $147 (€141) – up 40 per cent on the figure for the same period last year. Operating profits per available room were almost back to pre-pandemic levels.

In addition to rising room rates, hotels in the US have increasingly been adding hidden extras which most people do not spot at the time of booking, particularly online, and which are then levied on check-out.

For years American beach hotels have been adding “resort fees” to the bills, generally as a daily charge for using pools etc.

However, city hotels have now gotten in on the act.

On checking out from an overnight stay in New York city recently from a room that was fully paid for in advance, a bill of $30 was presented to cover use of a fitness centre and the availability of phone calls from a landline (who uses landlines in hotel rooms any more?). The charge had apparently been introduced by the hotel the previous Monday, after the booking was made.

‘Destination fee’

A search last week for hotels in a western state ahead of a forthcoming trip showed a another type of charge in the fine print – a “destination fee”.

Essentially these extra bills – sometimes running to $20 or more per day – were to cover the provision of items such as coffee-making facilities in a room or maybe a couple of bottles of water. All of which traditionally would have been part of the room price. Even hotels marketing themselves as offering free wifi were including this feature as a justification for the new destination fee.

The hotel industry in the US and elsewhere undoubtedly took a terrible hammering during the pandemic. However, it would seem some management have spotted an opportunity in the recovery to boost profit margins. Will we see, for example, a return to daily housekeeping in hotels, which was suspended in many cases during the pandemic?

Diners at restaurants with the Covid recovery charge may bristle at the higher costs as management seek to recoup last year’s losses. However, at least their owners are being more honest and transparent about what they are doing.

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