New York City Hotels Tacking on 'Urban Destination Fee'


Lobby of the Westin New York Times Square

Business travelers to the Big Apple might want to check twice before they click and book their next stay. In addition to the combined 14.75 percent taxes that make up the nightly occupancy charge on daily room rates, many of the city's hotels have begun adding an additional "urban destination" charge that can cost unsuspecting guests as much as $35 a day.

The new fee is smartly packaged to soften the blow with an array of complimentary extras, from high-speed Internet access and in-house food-and-beverage credits to yoga classes at a local studio, laundry service, walking tours and Citi Bike passes. For example, the mandatory $25 nightly "destination fee" at the Westin New York Times Square comes with a $15 F&B credit and a $15 laundry credit, as well as guests' choice of either a Strayboots walking tour and scavenger-hunt app download or two Citi Bike passes.

At the New York Marriott Marquis, the daily mandatory $25 destination fee, which the hotel began charging last August, includes a $15 credit at the hotel's Fresh Bites grab-and-go restaurant, enhanced Internet access, one tour ticket "and more." At the W New York Times Square, the same $25 fee includes a $20 credit at the property's Living Room bar lounge on the hotel's seventh floor, as well as a $20 laundry credit and the choice of a ticket to Gulliver's Gate (a new 50,000-square-foot, $40 million miniature attraction in Times Square) or access to a local gym.

When contacted by M&C, a Marriott spokesperson said the Times Square hotel is one of seven New York City properties in the company's combined Marriott & Starwood portfolio taking part in the new "destination fee" pilot program, and that the company will be reviewing feedback and data on the program to ascertain the response of guests, owners and operators.

"The value of the fee is 4:1, so the retail sum of offerings is $100 for the $25 daily fee," said the Marriott representative, who added that Gold and Platinum Marriott Rewards loyalty members, who already receive complimentary Internet, will earn an extra 500 loyalty points. 

Hilton, it turns out, also is testing a $25 mandatory destination fee at two of its New York City hotels, the Hilton Times Square and the New York Hilton Midtown. The charge, however, does not appear on either of the hotels' websites. When M&C contacted the front desk of both hotels, the fees were disclosed and include a daily $10 food credit, a $15 beverage credit - which can be used daily or in a lump sum for multiple-day stays - and "free local and 800 calls."

When asked about the new fee, a spokesperson at Hilton's corporate headquarters said, "We have two properties in New York City that are testing an urban destination fee for amenities and services that we believe enhance the guest experience."

It is doubtful, however, that business travelers will embrace the enhancement this new mandatory charge brings to their room rate, particularly if they don't intend to have meals at their hotel, are not in town long enough to need a freshly laundered shirt, or don't intend to take a spin around the city. When it comes to free telephone calls, free apps and social networking platforms, not to mention personal cellphone plans, have largely relegated the use of in-room phones to orders for room service or calls to other service departments.

This year hotels are on target to rake in a record $2.7 billion in fees and surcharges, up from $2.45 billion two years ago, according to research released this past September by Bjorn Hanson, a clinical professor at the New York University School of Professional Studies, Jonathan M. Tisch Center for Hospitality and Tourism.

"I would have to say I find this new fee troubling, particularly for business travelers," said Hanson. "It's hard to make the case for hotels in an urban location, compared to resorts. There are travelers who arrive, sleep for a few hours then leave for the airport again. How much of its value-added amenities a business traveler will find useful and of value remains to be seen." On the other hand, according to Hanson, New York City is the perfect market to test out such a fee, because of its average 86 percent occupancy rate. "It isn't easy to say, 'Well, I will go to another hotel,'" he noted.

In January 2017, the Consumer Protection Division of the Bureau of Economics of the Federal Trade Commission published an analysis of hotel resort fees that found that "separating the mandatory resort fees from posted room rates without first disclosing the total price is likely to harm consumers by increasing the search costs and cognitive costs of finding and choosing hotel accommodations."

When asked to comment about the new fees, the Hotel Association of New York City, which has 280 members, issued this statement: "Each hotel has its own policy with regard to urban fees. They are a function of a basket of services offered by some of them. The Hotel Association does not have an official position on the revenue-management initiatives of its members."