Consumers are stuck in the middle of a travel industry squeeze play. Some travel suppliers, from hotels to airlines to cruise lines, have restructured their prices so they can A) advertise lower costs and B) reduce their commissions to travel agents.
This battle between wholesalers and retailers may sound like an industry skirmish that doesn't directly affect consumers. But it affects us in countless ways--as I see it, none of them good.
For the Record
Los Angeles Times Sunday November 5, 2000 Home Edition Travel Part L Page 6 Travel Desk 1 inches; 26 words Type of Material: Correction
Travel agent commissions--The prevailing commission payment rate from airlines to travel agencies was incorrectly reported ("Travel Insider," Oct. 29). The payment is 5%, not 8%.
By bolstering their base prices with resort services fees (in the hotel trade), fuel surcharges (in the airline business) and port fees (in the cruise industry), the people who sell travel are making it more difficult for us to see the real cost of what we're buying.
Resort fees: I'm starting with these because many people don't realize they exist--including me until recently. In the last few years, some resorts have begun charging extra fees for services that many travelers think will be covered by their room rate.
My enlightenment came this month at the Pointe Hilton Resort at Tapatio Cliffs in Phoenix. The desk clerk explained that my daily room rate was $169 but that my "resort services fee" was $8 more per day per room (plus 89 cents in local taxes). That covered local and toll-free calls from my room, the in-room coffee service, daily newspaper, tennis court time and fitness center use, rides on a shuttle bus to resort restaurants and recreational facilities, and unlimited faxes (incoming and outgoing). The resort pays travel agents no commission on money that comes in that way. Resort spokeswoman Carolyn Hicks later explained that the fee is optional (without it, you pay $1 for each phone call and $10 a day to use the gym), but the desk clerk didn't say that. When I protested, the clerk shrugged sympathetically but did nothing.
I would expect to pay to send or get faxes, and I'm resigned to paying 75 cents or $1 per outgoing call at upscale hotels. But the idea of paying extra to play tennis or ride a stationary bike quickens my heart rate in a way neither of those exercises ever could.
At first, I hoped these fees were some sort of Arizona anomaly. They're not. At the San Diego Hilton Resort & Spa on Mission Bay, guests often pay $150 and beyond per night for a room--and $10 more per day to use the gym.
The Saddlebrook Resort in Tampa, Fla., assesses a $6 per adult per night "resort fee," which a desk clerk said covers local calls, in-room coffee, daily newspaper, use of the fitness center and "daily housekeeping." Travelers in groups often face a built-in "bellman fee" of $3.50 arriving and $3.50 departing.
The Westin Maui--where brochure rates begin at $280--assesses an $8.33 daily per room resort fee to cover local and credit-card calls, use of the fitness center, in-room coffee and tea, paper delivery, self-parking and shuttle-bus rides. The resort fee, a reservations operator told me, "is part of the deal. It is not optional."
Bottom line: When checking hotel rates, ask whether there are any added fees, either mandatory or optional, for the hotel's amenities.
Fuel surcharges: When petroleum prices began climbing in 1999, the airlines saw not just a challenge but an opportunity. Instead of increasing prices to match the increase in expenses, most of the major carriers created "fuel surcharges" in January. In many cases those surcharges were to be added on top of the air fares listed on the first displays seen by travel agents on their reservation system screens. Continental led the way with an announcement on Jan. 19. Southwest Airlines, resisting, chose to simply adjust its basic prices, but other competitors followed Continental's lead.
This way, the airlines could not only make their prices briefly appear to be lower than they are, but they also could hold the "surcharges" out of the commissionable part of a travel agent's sale. So instead of making $8 by selling a $100 round-trip ticket (the prevailing commission rate is 8%), an agent now would make $6.40 by selling an $80 air fare with a $20 fuel surcharge.
When fuel prices kept rising, the airlines quietly increased their surcharges. On American, for example, an LAX-JFK round trip booked Oct. 18 carried fuel surcharges of $20 each way. When I checked a United LAX-JFK fare (without advance-purchase discount) on the same day, the airline's Internet site quoted me $2,212. The next page increased that to $2,257 "including taxes." Only when I called the airline and asked did an operator acknowledge that $41.32 of that was not taxes at all, but the airline's own fuel surcharge.
Bottom line: When comparing air fares, be sure all the price quotes include fuel surcharges and taxes.
Port fees: Port fees include the charges that governments make on ships calling at their waterfront, but over the years, the cruise industry widened the definition to include nongovernmental costs such as stevedore labor expenses. Every cruise line developed its own way of counting port fees.