Avoid Being Hit with Hidden Fees

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hidden feesHidden fees are increasingly on planners’ minds these days, as add-on fees proliferate. But they may actually be “hidden” in plain sight — you just have to know where to look for them.

Resort fees, surcharges on everything from fuel to water…it seems like the new add-on costs are multiplying at a dizzying rate these days. And no one likes being caught unaware after the fact with an extra fee for, say, an in-room mini-fridge for a nursing mother’s guest room.

But are venues really being sneaky about not disclosing extra fees or burying them in the fine print? Prevue recently caught up with leading hospitality consultant, educator and voice for inclusive meetings Joan Eisenstodt, Principal of Washington, D.C.–based Eisenstodt Associates, LLC, to get her take on the seeming proliferation of add-on fees — and how planners can inform themselves so they don’t get surprised when the final bill comes due.

As she points out, some of what may appear to be new fees actually have been around for a long time, but are just now being noticed because planners are reading their billing statements more closely. Some examples of these “old and still not known to many” fees, she says, include those levied on food and beverage (F&B).

“It was always discussed as the charge for a meal ‘++’ — with that ‘++’ being tax plus service charge or gratuity. If it were a gratuity, it wasn’t taxed. Now it’s most likely a service charge that is taxed,” she explains. So, not really a new fee, but a new way of applying an older one. She says there also is often an “administrative fee” tacked on, which may or may not be taxable. “For budgeting, knowing the amounts and if they are compounded or individually taxed and added together can make a huge difference.”

But sometimes, even the most savvy planner can be hit with a surprise fee. For example, Eisenstodt tells the story of a colleague who negotiated a multi-year contract for meetings that were postponed because of COVID. “They thought they’d asked all the best questions. After the meeting, they learned that some of the space they were using ‘in the hotel’ was owned and leased out by another company. The fees were never disclosed nor were the taxes on the use of the space.”

Here’s more of Eisenstodt’s advice on what to ask — and when — to avoid being hit with “surprise” fees. (Note: This is the first in a two-part series. See Part 2 here.)

Prevue: Generally speaking, how do market conditions play out when it comes to hotels (and other types of businesses supporting meetings/events) imposing new fees?

Joan Eisenstodt
Joan Eisenstodt, Principal of Washington, D.C.–based Eisenstodt Associates, LLC

Eisenstodt: We’re now dealing with market conditions that would have been called a “sellers’ market” — except it’s more than that. Some of the greatest challenges for hotels and other venues that impact what and how they charge include understaffing (and having to pay higher wages to attract and retain staff); a call to organize (into bargaining units/unions) for better pay, working conditions and benefits; supply chain for goods; and climate (drought, heat, floods) and the resulting costs on operations and F&B availability and costs. Planners often say “I never pay for meeting room rental,” yet they don’t consider the cost for the use and upkeep of the space. I negotiate for clients — groups — and always look at what their budgets are. And I must be and am cognizant of what the costs are for what the groups want/need for their meetings.

Charging for power in a meeting room is not consistent even within the same brand/ownership/management company. I remember when a previous drought meant that either no water was served or there was a charge beyond one glass of water per person at a sit-down meal. So far, I’ve not heard that it’s being charged again, and I’m puzzled why, especially in states like Texas where water is being rationed for some.

Prevue: What can planners do to avoid being surprised by new fees that crop up due to changing market conditions? How can they learn about new fees — are they generally available on a website, should they ask in their RFPs, etc.?

Eisenstodt: I’m not sure we will ever not be “surprised” by fees about which we might not have known or even anticipated because conditions change — there could be new owners or new branding, as well as all the outside forces that impact pricing.

The fees are not necessarily “hidden” — they are often available on an hotel’s website or in the attachment to a proposal of “policies and conditions.” It’s that they are not thoroughly read or questioned. Language is funny, right? Words can have multiple meanings. 

Prevue: Could you give us an example?

Eisenstodt: I pulled this from an attachment to a COVID-postponed renegotiated contract. The client was required to sign it in order to be able to hold their meeting:

• Staffing Levels & Concerns. Hotel assures Group that Hotel’s staffing levels will be the same or better at the time of the Event than it was during Group’s 2019 event at Hotel.  Hotel’s staffing will be appropriate for the occupancy of Hotel over the Event dates and Hotel will provide courteous and attentive staff.

•This includes providing adequate staff to timely perform catering, outlets (managed by Hotel) and housekeeping services.

•This also includes providing adequate staff to promptly handle front of house support including front desk (check-ins and check-outs), bellhops, doormen, valet, etc.

What it doesn’t address are specifics — or if there are increased charges for “adequate staff.” We tried to tighten the language and, because of circumstances, the answer was a hard “no.” 

Prevue: How can you address these issues up front?

Eisenstodt: Requests for proposal (RPFs) should ask many questions and if the answers aren’t forthcoming, keep questioning the proposal language. The RFP process is being made to be far more transactional again, spurred by the e-RFP formats that are in essence rates-dates-space without the data needed for decisions — like what charges will there be. As an industry we say, on all sides, that no one likes surprises.

To avoid surprises, we need to ask, and then say, “tell me more.” We all have greater access to articles, colleagues and information than ever before. I recommend subscribing to a business journal or, if there is one, a newspaper for the area, or to a business magazine (print or digital) to watch trends that are impacting all pricing. If it impacts individuals, it will impact hotels and pricing. 

Prevue: How does the increase in procurement’s involvement in meetings and events factor into this?

Eisenstodt: Many planners — corporate and association — are accountable to procurement or like departments who only see bottom-line issues and not the return on investment for the experience of the meeting. Say you have a meeting where there’s a charge for water in the meeting room — not bottled but dispensers — and you know that it’s better for participants to be hydrated, but procurement says it costs too much. Or say you are charged for power in the meeting room — which happens more today and likely will continue to occur to a far greater extent in the future due to infrastructure and climate. You know that your participants want to charge their devices while learning and it will cost the meeting and again, you have a bottom line you must meet.

Planners need to know what matters to the meeting and what the hotels need to profit in what areas. We’ve seen the number of hotels — big convention hotels — whose owners are walking away from the debt. If that happens, we may not have a place to meet. Yes, hotels must make a profit, and yes, planners say “but not on my meeting” — that’s where negotiations occur. Look at all the pieces. Take time to investigate.

Stay tuned for part two of this article, where Eisenstodt will dive more deeply into specific ways planners can avoid getting surprised by fees they didn’t see coming.

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