Uh-oh! Here come the new travel fees
The travel industry is starved for revenue and here's what could happen next
Resort fees may be dead, but other fees live on.
To be honest, I'm not even sure if resort fees are gone. Experts claim they are after the surprise settlement between Marriott and the Pennsylvania Attorney General last week. But as of now, even Marriott hasn't taken any meaningful steps toward compliance in Pennsylvania or outside the state. We'll have to see.
But I know this much: If resort fees have checked out permanently, the hotel industry will scramble to find revenue somewhere else. In fact, even as we go about our holiday shopping, the travel industry is actively looking for new sources of revenue.
How do I know? Well, you may have noticed that the travel industry doesn't earn much of a profit from its products but from surcharges — fees for changing tickets, fees for selling loyalty points, fees for parking. The travel industry's entire business model is based on fees and ancillary products.
It's time for a 2022 prediction: There will be new fees!
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The airlines, which gave up a rich source of revenue when they cut back their ticket change fees, need another fee or two. If the hotel industry must give up resort fees, it will have to find something else — and soon. My advice is not to get too smug about the consumer having the upper hand in Year Three of the pandemic, because you ain't seen nothin' yet.
They're coming for your wallet, my friends.
Have you seen any new fees?
We had a terrific discussion about fees on our Friday Forum. But today, I'd like to hear your travel fee predictions. Also, have you seen any new charges in your recent travels? Push the big red button to leave a comment or scroll down if you're reading this online.
Airlines will bring back change fees — and more
Remember how airlines swore off ticket change fees at the beginning of the pandemic. One U.S. carrier, United Airlines, even promised to do away with them forever.
Ticket change and cancellation fees didn't go away. In fact, in 2020, the same year as airlines collected $51 billion in federal aid, they dinged their passengers with almost $900 million in these fees.
The loophole: Certain "basic" economy class tickets never jettisoned these annoying, unconscionable fees. So all an airline really needs to do to revive the fees is to reclassify more of its fares as "basic," which is, you know, pretty basic. The airline passengers who thought they had scored an important victory now have to pay even more when they change their airline ticket, even if it's for something like another COVID variant outbreak or for personal health reasons.
But change and cancellation fees are just the beginning, you can be sure of that. To get an idea of the type of fee innovation happening with airlines, you have to dig deep into the ancillary fee projections gleefully reported every year by IdeaWorks. It projects ancillary airline revenue will increase to $65.8 billion worldwide in 2021, compared to $58.1 billion in 2020.
Some of that money will come from "gotcha" fees like ticket change fees. But most of it will be generated from airline miles sold to other companies.
Airline miles are complicated by design.
Banks and other businesses pay airlines for the rewards points. Then companies give the miles to customers when they buy their products. But to fund the purchase of these miles, the companies raise their prices.
So essentially, we're all paying a mileage tax.
It feels like a victimless crime, or in corporate parlance, a "win-win." But it isn't. We know that airlines are doubling down on their loyalty programs now to extract more revenue from their partners and from you. And at some point, it will end where all unfair taxes end.
This loyalty program nonsense can't last forever. Maybe there will be a tea party and an insurrection and all the worthless miles will go into Boston Harbor. Or something like that. And then airlines will have to go back to earning money honestly — by flying customers and cargo.
Hotels: What will replace resort fees?
When it comes to hotels, the big question is: What will replace the billions of dollars in resort fee revenue? Everyone thought the answer would be a la carte fees. This summer, the mainstream media breathlessly reported that MCR Hotels was experimenting with the creative fees for the use of its pools at some of its properties.
But this was not a new story. Some hotels have tried — and failed — to force their guests to pay extra for the use of the gym, for breakfast, or for internet access because, frankly, they should be included in the room rate for your stay.
A more pernicious fee, which isn't getting the same kind of hyperbolic media coverage, is "optional" housekeeping wrapped up as a safety excuse. Many hotels cut back on housekeeping after the pandemic, insisting that it was for your own protection. Now they're bringing it back with an eye toward ancillary revenues. If you'd like your room cleaned, it'll cost you extra. That's right, hotels are monetizing housekeeping.
Here's where things could potentially get complicated for guests. The cleverest hotels might ask you to opt out of the fee if you don't want it. So you have to pay an additional $10 per room per night unless you specifically say you don't want it.
But really, we don't know. Will the latest Marriott settlement kill all resort fees? We'll have to see. What could possibly replace it? Something tells me opt-out housekeeping won't quite match the easy money that resort fees represented. Hotels will try harder to find new revenue, and eventually, they'll come up with something that's just as good — or bad.
What will happen in 2022?
The travel industry — not just airlines and hotels — is addicted to fees. They removed a few minor fees voluntarily at the start of the pandemic, but they had no intention of getting rid of them for good. Even the Pennsylvania AG's settlement with Marriott will not end annoying hotel fees. Instead, it will lead to another, potentially more aggressive wave of hotel fees.
And there's more. Cruise lines, tour operators and car rental companies have all turned to ancillary revenues in recent years. And as the world starts traveling again next year, they will introduce or re-introduce more fees. You can count on it.
I'm not quite ready to declare 2022 the Year Of The Travel Fee. We still have to get past this nasty Omicron variant, which could affect bookings next year. But I have a few observations:
This is a strange way to say "thank you." If my predictions are true and more travel companies ramp up the fees, it will be a peculiar way to show their gratitude for the business you gave them during the pandemic — or the generous taxpayer bailout, in the airlines' case. Shouldn't travel companies spend the next year doing everything they can to make you feel appreciated? But no.
Take nothing for granted. All the conventional wisdom about fees lurking in the fine print (so don't forget to check it!) might be wrong. Certainly, you won't see any warnings about opt-out housekeeping fees, and there's no requirement that businesses disclose a fee like that. Ditto for a la carte fees. And don't forget to ask before you open that bottle of water in your hotel room.
The best companies will rise to the top. I'm serious: Good customer service and honesty will never never be more critical than in 2022. By the way, next month, we start voting on our Readers' Choice awards at Elliott Advocacy. I hope you'll cast your vote.
Maybe instead of coming up with new fees, travel companies should be inventing new products that we's be willing to pay extra for. How about innovating your hotel room amenities? Or finding a better way to fly us somewhere?
Charging more for less won't work in the long run even if you try to confuse us with half-truths and loyalty programs. We're smarter than that.
Your turn. Tell me about your latest "gotcha" fee and how you would have avoided it. Also, what fees do you predict for 2022? The comments are open.