PwC Forecasts Stable Hotel Room Rates in US, Higher Surcharge Costs

PricewaterhouseCoopers (PwC) projects an increase of 7 percent in fees in the U.S. lodging industry in 2006, although the increase will not come from basic room charges. Half will result from a 3.1 percent increase in occupancy and the other half will come from a larger number of hotels charging fees and surcharges and an increase in the amounts of those charges. The projected increase in the number of hotels charging fees and surcharges is the smallest since 2002.


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Many of the surcharges represent facilities use and would be charged to companies or organizations holding meetings in a hotel. Others, however, including internet access and telephone and fax charges, are added to a guest’s room bill.

“The U.S. lodging industry has invested record amounts in facility and services enhancements and realizes that many travelers and travel influencers are very rate sensitive,” said Bjorn Hanson, PhD and partner in PwC’s Hospitality and Leisure practice. “Fees and surcharges are not included in the room rate and therefore are exempt from occupancy taxes,” he added.

Occupancy taxes vary widely by state, and Marriott International, Inc. has introduced a new service for guests that eases checkout shock by calculating taxes and surcharges when the reservation is made. Called Total Trip Pricing, it factors in all taxes and surcharges in an easy-to-read, line-by-line layout before customers complete an online reservation. Total Trip Pricing is also available through Marriott’s toll-free reservations line, or by contacting a hotel directly or through certain travel agents, the company says.

“We want to ensure that our guests are as fully informed as possible about the actual price of a guest room, including taxes, before they make reservations with us,” said Amy McPherson, executive vice president, Sales and Marketing, Marriott International. “Total Trip Pricing will remove much of the uncertainty in planning and budgeting for a family’s vacation or upcoming business trip by making pricing more transparent.”

Another potential source of increased revenue in the hospitality sector is franchising, according to Melanie Butler, partner in Licensing Management Services at PricewaterhouseCoopers LLP in the UK, hospitality net.org reports. Franchising is in its infancy in Europe, she says, but companies should pay close attention to licenses and franchising agreements or risk losing revenue from underreporting of royalties and license fees. .

“Now is the time for the industry to ensure that the agreement terms such as net room revenue and allowable deductions are clearly defined, that thorough and unrestricted examinations can be conducted regularly and ongoing contact with franchisees is maintained,” she said, according to hospitality net.org.

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