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Hotel Rates Abroad Tax Power of Interpretation

Published lodging prices might not tell the real story; in some hotels, taxes and service fees can bloat the bill by 27%.


I've always suspected that travelers spend too much time obsessing on air fares and not enough time obsessing on hotel rates.

Part of this is the plain inconvenience of doing the math. With an air fare, you see a $100 difference in a posted price, and that's that. With a hotel, you see a $15 difference, and maybe you don't bother multiplying that by five or seven nights.

Another part of this is that hotels are happier when their rates are wrapped in a bit of mystery. That's why they publish "rack rates" on their brochures that are twice as high as the rates most guests pay. (If you check a Zagat hotel guide, you'll see that customers routinely report paying 25% below hotels' rack rates.)

To pay less, alert travelers invoke their auto club or AARP memberships, inquire about seasonal specials, use discount coupons or book through a travel agent or tour operator who gets special deals for delivering many customers.

But even if you're wise to these ins and outs, you still may be missing something once you venture outside the United States, because many foreign hotels follow local custom when quoting room rates.

The result can mean you pay more than you expected or you pay less, or you've been comparing apples with oranges when doing your pre-trip research.

Typically, the higher the price bracket, the more likely you are to find extra costs tacked onto the advertised price.

For instance, if you make just two wrong assumptions while hunting for luxury lodgings in Baja California, you can end up paying 27% more than the price you were quoted. (I'll come back to the details of that.)

This doesn't mean hotel reservation clerks are lying. It's just that many hotels prefer to put an appealing price in large print, then add the extras with a footnote below in smaller print.

It's something like the airline industry practice of advertising flights to New York for $200, then noting in smaller type that they're actually $200 each way, round-trip purchase required, good only on certain dates, and so on.

In the United States, the marketplace has trained consumers to presume that taxes are excluded from quoted prices. When traveling at home, Americans usually are conditioned to expect that hotel taxes, typically set by local government, will add about 9% to 16% to the bill.

But in Canada, Britain and Mexico (and farther afield as well), the playing field is different.

In Canada, hotels typically exclude taxes from their rate quotes. The taxes are a mix of federal and local levies. First there's Canada's Goods and Services Tax, or GST, which applies everywhere. Then there are provincial taxes.

At the downtown Best Western in Vancouver, British Columbia, for instance, guests pay 7% in GST plus 10% in provincial taxes-in all, 17% beyond the rate you may have been quoted by a reservations clerk or a travel agent, or seen on an Internet site. At the Park Hyatt Toronto, a 5% provincial tax is added to the GST, so effective rates are 12% above what's quoted. (The other thing to check, of course, is whether the dollar being quoted is U.S. or Canadian; today, $1 U.S. is worth about $1.56 Canadian.)

In Britain, most budget and midrange lodgings include taxes in their quoted rates. The hotel tax in England, known as the Value Added Tax, is 17.5%. Though travelers can get VAT refunds on many goods they take home from Britain, hotel rooms are not among them. (There's more VAT information on the Internet site es.htm#Intro.)

So far, you may be thinking, this is not complicated.

But look at the high end of British hotels. They do things differently. Here's the Savoy in London, advertising rooms from about $415. (On the hotel's Internet page on room rates, a note near the bottom says that VAT "will be added.') Here's the venerated Brown's Hotel (about $385 and up) following the same format. That's certainly not visitor-friendly, but many upscale London hotels do the same.

Confused? Now come with me to Mexico.

On a recent trip to a Pacific Coast resort town, I collected brochures at more than a dozen hotels. Some quoted rates in pesos, some in dollars. (This year the exchange rate has been about 9.5 pesos to the dollar.)

But that wasn't the trouble. Nor did I mind that most of those hotels excluded taxes from their rate quotes. I'm used to that.

Mexican hotel taxes vary by city and state. As of last week, for instance, they were running 17% in Zihuatanejo, 12% in Baja's Los Cabos and 15% in La Paz, the state capital of Baja California Sur.

Then the muddle deepened. Some Zihuatanejo hotels, such as Villas Miramar and Hotel Paraiso Real, quoted prices with tax included-which meant they were a 17% better value than they appeared at first glance.

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