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Fees, Fees Everywhere

If you thought that airlines were the worst offenders for loading their customers with fees, you haven’t stayed in a hotel, cruised, or rented a car lately. The Internet, with its many online agencies and price-comparison metasearch engines, has created an environment that puts huge pressure on suppliers to show the lowest possible base prices. As much as possible, they’re focusing on fees to meet revenue targets. That means you have to do your research to avoid nasty surprises or disappointments.

First, let’s dispose of the subcategory of “mandatory” fees—the ones you have to pay, either when you buy or when you use the service.

  • By far the worst, because they’re most often hidden, are those mandatory fees hotels label as “resort,” “housekeeping,” “porterage,” and such. Hotels routinely exclude them from the phony base rates they supply to online agencies such as Expedia, Travelocity, or Priceline. Sometimes, you find out about them before you buy; other times, the display simply says “subject to additional possible fees payable on arrival” or such.
  • Also bad are the many fees that rental-car companies retain and label in such terms as “recovery” or “license” fees. Those fees can easily double the cost of a rental. But they’re not as bad as the hotel fees, because the online agencies find ways to offer optional “all-up” fee-inclusive prices from the very first display.
  • Airlines tried this with fuel surcharges, too, but the Department of Transportation and European authorities promptly called a halt. Cruise lines also tried it with port charges, but the state of Florida forced them to stop.

Mandatory fees are a flat-out scam. Period. Any mandatory charge should be treated as part of the base price and included in the posted base price. Giving them plausible names is a dodge: As long as you have to pay, what you pay is part of the price, carved out of what is the real price.

That leaves you to contend with “optional” fees—often covering services that you really expect to be included in the base price but that sometimes aren’t. And these aren’t chump change. A recent report on ancillary revenue from IdeaWorks, a company that helps other companies maximize these revenues, provides some examples. The report notes that ancillary revenue accounts for almost 30 percent of Norwegian Cruise Lines’ revenues. Some of these revenue streams are from truly optional sources, such as the casino and shore excursions, but a lot of them come from “premium” dining and beverage revenues that many of you would expect to be included in the base rate. And, of course, airlines—the masters of optional fees—raked in more than $22 billion last year, and my guess is that the reported number understates the actual take.

For the future, the real problem for you, as a consumer, is that suppliers will carve out as many services as possible—services that you expect to be included in the base prices—and treat them as optional. Here are my guesses on the most likely fees:

  • Airlines still have some room for new fees. The most likely are additional fees or “co-pays” for frequent-flyer award travel on supposedly “free” trips—waived for top-tier frequent flyers, of course.
  • Hotels may stop providing daily housekeeping unless you pay extra. They may start charging for parking, even when they’re in suburban locations with large surrounding lots. Although “free” Wi-Fi is catching on in a big way, you may see future charges.
  • Cruise lines—especially the mass-market lines—will designate more of their dining venues as “premium” and will move more entrees to the list of “premium” offerings in main dining rooms. They may also start assessing “cover charges” in their main entertainment venues.

All this is bad news for you. Accurate price comparisons will be more difficult, and total travel expenses will exceed your expectations. The hope is that the online travel agencies will be able to cope with fees, but they say they can’t. More than ever before, caveat emptor!

Ed Perkins on Travel is copyright (c) 2012 Tribune Media Services, Inc.

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