What is a destination fee, and why are more hotels charging them

My hotel bill from a three-night trip to New York City included 21 charges.

Nine were for “destination fees.”      

There were three day by day fees of nearly $35 each — notwithstanding that my third night was alleged to be “free”— plus separate sales and occupancy taxes on each fee.

And that was only for certainly one of our rooms — we booked two. All in, the fees were $240.

I’d examine “junk fees” within the hotel industry — how they’re often couched in such terms as “resort,”  “destination” and even “hospitality service” fees, that they are on the rise (especially in North America) and that they even got a mention in President Joe Biden’s State of the Union Address this yr.   

But I’d also read that hotel staff will waive them, when pressed. I, nevertheless, had no such luck at the tip of my stay at Thompson Central Park New York, a Hyatt hotel. The front desk staff insisted the fees be paid.  

In a written response to CNBC, Munir Salem, the manager of Thompson Central Park said: “Like many hotels in the realm, Thompson Central Park features a day by day destination fee to offer guests with amenities, activities, and other advantages that we imagine guests will enjoy.”

The hotel’s website says its “destination fees” provide amenities like:  

• Premium web access
• Access to a fitness center
• Concierge business services
• Newspapers on request
• One bottle of water per guest at check-in

Those are all things I thought would include my booking, especially since entry-level rates frequently exceed $500 per night.

There’s more. The fees also provide discounts: a free hour on a motorcycle rental (with one paid hour), 6% off The New York Pass for sightseeing, 8% off a hop-on hop-off bus tour, and “exclusive access to twenty% off” zoo tickets — all advantageous things, but nothing I wanted or would use.

In the competitive luxury hospitality industry — where operators strive for flawless stays and glowing online reviews — hotels with fees run the chance of leaving guests feeling hoodwinked right before they walk out the door.

But the rationale is not surprising.

“It’s very lucrative,” Rafat Ali, the CEO and founding father of the travel media company, Skift, told CNBC. Federal Trade Commission estimates show consumers paid around $2 billion in hotel fees before the pandemic, and mandatory fees have grown since then.

Ali said hotels are hoping mandatory fees will eventually be normalized, just like how baggage fees at the moment are an accepted cost when flying. But it’s never going to occur, he said.

“This was the argument that they made all along, which is: If I’m not checking baggage, why should I be paying that as a part of the bundle?” he said. “In hotels, that does not work because … you are not unbundling anything, you are just adding this on — and there isn’t any option to opt out.”

On Aug. 1 on Skift’s website, Ali wrote an open letter to the travel industry with one message: “You won’t win this ‘junk fee’ fight.”

The reason, he said, is that even in a partisan world, everyone dislikes these fees.  

Last March, the Junk Fee Prevention Act was introduced within the U.S. Senate to eliminate “excessive, hidden and unnecessary fees” and require total costs be clearly displayed “when a price is first shown to a consumer.”

In July, a bipartisan bill introduced within the U.S. Senate specifically targeted fees within the hotel industry. The bill, the Hotel Fees Transparency Act, prohibits hotels from promoting rates without mandatory fees.

Ali said, whether the bills pass or not, he believes they put public pressure on corporations to act — similar, he added, to how the Biden Administration targeted airlines that charge families to take a seat together. United, American and Frontier soon modified their policies.  

On Aug. 10, the Attorney General of Texas sued Booking Holdings — which operates popular booking sites like Booking.com, Priceline, Agoda and Kayak — for deceptive trade practices, taking aim at corporations that publicize one rate and tack on mandatory fees later within the buying process.

The suit addresses this practice, often called drip pricing, calling it an illegal “bait and switch tactic” that leads more consumers to make purchases either because they do not notice the brand new fees or because they begrudgingly accept the fees at the ultimate booking page — out of a reluctance to start out the method all all over again.

Pennsylvania lodged an identical grievance against Marriott International Inc. In April 2023, the hotel chain agreed to pay $225,000 to Pennsylvania for failing to comply with agreed settlement terms, which required that Marriott clearly post room rates and mandatory fees.

Thompson Central Park’s Salem told CNBC that its “direct booking channels fully disclose room rates and any fees to guests throughout the booking process.”

I checked that, and indeed the hotel’s website does include the $35 fee in the full cost. Searches on Booking.com and Expedia showed the identical. Perhaps I must have expected the fees in any case?

But the issue is I didn’t book online; I booked over the phone (my family needs connecting rooms which is a difficulty unto itself). Additionally, once we checked in, the hotel couldn’t locate our booking, which resulted in our having to barter a latest booking on the spot. During these discussions, we talked about rates quite a bit, but destination fees never got here up.

In an announcement in support of the Hotel Fees Transparency Act, the American Hotel & Lodging Association’s President and CEO Chip Rogers said the bill “will create a single standard for mandatory fee display.” But even with transparent pricing, cases like mine could slip though.

I’m left wondering why hotels don’t simply wrap these fees into the room rate. After all, the identical guest who’s advantageous with a $300 nightly rate may balk at paying $250 for a room and $50 for a “hospitality service fee.”

Several days after our stay, my husband and I — hell-bent on principle at this point — called the hotel to dispute the fees. The representative said he would remove the fees if we were Hyatt loyalty program members. We aren’t.

But due to our check-in fiasco, we were told we were good candidates to get the fees waived.

We hung up and waited — that was nearly two months ago.    

After weeks of silence, I finally called my bank card company to dispute the fees, as advisable by articles like this one, written by consumer advocate Christopher Elliott (who received the identical puzzling email that I did, touting destination fees of “just $30” at a California hotel that “guests will genuinely love”).  

Within minutes, my bank card company removed the fees. An email quickly confirmed this, stating: “Your dispute has been resolved.”

But victory wasn’t the emotion I felt. Don’t get me improper — I used to be glad to avoid the fees. But this was never concerning the money. It’s concerning the inherent unfairness of being handed a hotel bill composed of multiple charges you didn’t see coming.