Hotel Taxes and Fees / by kevin murray

As a consumer, you learn over a period of time, that there are prices, and then there are prices that have added on to them extra taxes, fees, insurance, and whatnot, which often you are only vaguely aware of.  For instance, hotels typically charge whatever the prevailing sales tax rate is for that particular county but also like to add on agratuitous hospitality tax, then there are some hotels that add on a resort fee, and then there are even States, such as Georgia, that tack on a fixed hotel stay fee of $5 per night.  The problem with all of these fees and taxes is that these are almost always added onto the advertised or agreed-upon room rate, and therefore when hotels advertise that their room is $90/night or whatever, the overall price of the hotel room may be $115 or even more when the bill is actually totaled up.  It just seems since the hotel is easily aware of what the total for the room cost will be with all taxes and fees added in, that perhaps it would be more transparent and fairer to disclose the actual room total itself, upfront.

 

The thing with hotels is that there are two types of basic added expenses, which are broken down into hospitality taxes and hotel fees paid by the consumer.  In regards to taxes that amount is solely based on the agreed upon price of the hotel, so the cheaper the room, the cheaper the tax dollar hit will be to your wallet, whereas with fees, since that price is fixed, it doesn't matter whether you are at the Motel 6 or the Ritz, since you will have to pay the same fee, regardless, in the case of a State mandated imposed fee.  This means, in effect, that fixed hotel fees charged to the consumer are a form of taxation that is regressive, since the room price itself has nothing to do with the fee imposed.

 

One can make a strong argument that additional fees and hospitality taxes which are added onto hotel bills are bad business to begin with.  You would think, that most communities would want to encourage tourism by not unsettling tourists, especially not by nickel and diming them by virtue of the fact that they are spending the evening at a hotel and undoubtedly spending money throughout the day by taking in sights, shopping, and eating within the city.  Yet, that is exactly what happens to these tourists in many communities. 

 

I suppose that there is a general mathematical premise that some city hall genius comes up with, which believes something to the effect that if we just add on some extra fees, and also add-in some extra taxes, but don't really disclose that information upfront, that somehow the clients won't notice it until too late, and in any event, none of these taxes and fees will change their behavior, whatsoever, so that in the end we will reap free money out of them.  The thing is, they do take note of it, and it does make a material difference to them.