Hotel Marketing Podcast: Episode 251 – The Hidden Dangers of Hidden Fees

Good day fellow hoteliers and welcome to 2024! This is the Hotel Marketing Podcast by TravelBoom. Did you know 31.5% of travelers will abandon the booking process when hidden fees are discovered?

Today we will talk about the recent research we just completed that highlights the grave danger of hidden fees and how they impact your overall resort performance. You can read the full research as well as download a free infographic on the data right here.

Before Jeremy and I dig into the main topic, let’s take a look at what’s going on in the hotel marketing news world: 

In The News:

New York Times Suing OpenAI (ChatGPT) for Copyright Infringement 

The Main Topic: Finding the Balance in Hidden Hotel Fees

Hidden fees are a major topic in the hospitality industry and our country in general. VRBO and AirBnB have come under fire for not showing transparent pricing early in the process, Hyatt was recently served a suit regarding resort fees, and even Congress is jumping in with the Junk Fee Prevention Act.

This has led us to conduct a study of 300 travelers to gain insight into how a leisure traveler reacts when these fees are presented to them when booking a leisure vacation. We have this data available for any one and I would encourage everyone to download the data.

What is a hidden fee?

A hidden fee, now being referred to as Partitioned Pricing is any required cost that is not apparent until the checkout process. Note that this does not include taxes, optional add-on stay enhancements, or optional travel insurance.  

What hidden fees are the most frustrating for guests?

  • Online booking fees
  • Wi-Fi fees
  • Parking fees

The competitive landscape has driven hidden fees

The data from our research is clear, your potential guests feel that there should be no hidden fees. So why do they exist at all?

  • No clear way to compare multiple property prices
  • OTAs present the room rate only without fees
  • Properties attempting to win at the price game deceptively 
  • Properties trying to recoup the high costs of ever-expanding amenities
  • The realization that fees are not always treated the same way as the room rate when it comes to internal accounting, property management costs, and ownership disbursements.

What travelers expect from a hotel rate

Travelers appear to be very accommodating of fees for what they perceive as value beyond the stay. The frustration comes when the fees are for what hotel guests see as part of doing business. Most travelers were accepting of a small number of hidden fees (5% or less of room total) and surprisingly somewhat accommodating of resort fees when the real value is delivered.

How hidden hotel fees impact guest behavior

Tacking on a few fees seems like a great idea to increase RevPAR and overall profitability, but it can come with a high cost that may not be apparent.

  • 31.5% of travelers will abandon the booking process when hidden fees are discovered.
    • 12% will change their hotel choice when hidden fees are discovered
    • 19.5% will actively avoid hotels where they have found hidden fees in the past.
  • 52% of travelers noted that hidden fees would have a strong impact on their hotel review

Transparent pricing in hospitality

  • 92% of respondents are more willing to accept additional charges when shown upfront
  • 77% of travelers view a property more favorably when shown the total rate early
  • 49% of travelers noted they are more likely to choose a hotel with transparent pricing versus one with hidden pricing (assuming the total stay cost was the same)

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2023 Leisure Travel Trends Study

Get the 2023 Leisure Travel Trends Study at https://admin.travelboommarketing.com/study


Submit your questions and topic ideas on Twitter to @_travelboom or info@admin.travelboommarketing.com.

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