Hotels, Airlines: The High Cost of Hidden Fees

When was the last time you carefully read your airline ticket or hotel bill? What you’ll find--or in many cases what you won’t discover unless you ask--are hidden fees, surcharges and taxes that add considerably to the cost of every trip you make.

Few if any of these add-on charges are ever mentioned in travel advertisements. Few if any are ever mentioned when you make your reservations. More often than not, travelers discover the extra charges only when they go to pay for their tickets or hotel rooms.

It is, to say the least, a disturbing trend. For example, here are two airline ticket surcharges: a $3 international departure tax and a $5 Immigration and Naturalization Service fee for passengers coming into the United States from outside North America.

After last year’s rise in airline terrorism abroad, several U.S. airlines have imposed security surcharges. Pan Am, TWA, American and Northwest each charge $5 per passenger to cover extra security operations.

Some airports are also imposing surprise surcharges.

In Boston, Logan Airport hits the airlines with fuel surcharges. These are often passed on directly to passengers. Anyone flying out of Boston on American, Delta or TWA can plan on an additional charge of $2.31 plus tax. Eastern and Pan Am charge $1 per passenger.

Florida’s $1 Charge

For flights originating in Florida, most passengers are hit with an additional $1 charge.

For flights originating in Las Vegas, most departing passengers are assessed $7.50, a surcharge the airport charges its tenant airlines to help finance a recently completed airport terminal improvement and expansion program.

American, TWA, United, Northwest and Eastern charge each Las Vegas departing passenger the $7.50 surcharge. The charge isn’t mentioned in airline ads, and it isn’t quoted by airline reservations agents. While the validity of the surcharge is being challenged in the courts, it continues to be levied.

“We’re opposed to the proliferation of these charges,” says United spokesman Chuck Novak. “We think it’s unfair to us and to our passengers.”

United is one of a number of carriers suing the Las Vegas Airport Authority. The suit claims that the airport surcharge is too steep.

However, not every airline that is being hit with the surcharge is passing the cost on to its customers. For example, a Western Airlines Supersaver ticket between Las Vegas and New York costs $258. A United ticket for the same route officially costs the same, but departing passengers actually pay $265.50.

Western is one airline absorbing the surcharge. PSA is another. “We weighed the pros and cons of imposing such a service charge,” says PSA spokesman Bill Hastings, “and decided to stick with developing our market rather than raising our fares to accommodate the $7.50 charge.”

Other airlines not posting the surcharge on their tickets are Jet America, Southwest and America West.

Not every add-on charge is imposed in the air. You’ll find many surprise add-on charges only after your plane lands.

In Los Angeles, for example, everyone who uses a taxi to leave the airport is presented with something I like to call a little yellow surprise. “Welcome to Los Angeles,” says the slip of yellow paper. “Thank you for using a Los Angell 1/8 es authorized taxicab. We hope you will be pleased with our service.”

In somewhat smaller print, passengers are then informed that they have been hit with an additional $2.50 surcharge for the privilege of simply leaving the airport.

The Los Angeles City Council approved the passenger surcharge last August. Before the council action, each taxi driver paid $2.50 just to enter the airport, and had to absorb that cost.

According to Deborah Brown, public utilities inspector for the Department of Transportation for the city of Los Angeles, “the money was collected by the city and split between funding airport operations and salaries for taxi starters and the maintenance of taxi stands.” (C’mon, how much does it cost to maintain a taxi stand?)

Drivers Resisted

That might explain why so many taxi drivers refused to take passengers short distances from the airport. (At least it explains their attitude until last August.) “A number of taxi companies went to the city council,” reports Brown, “complaining that there was no way for their drivers to make any money on the short-run trips and the cabbies were refusing service to some customers.”

The council agreed, and changed the rules to require passengers to foot the $2.50 surcharge regardless of the length of the cab ride. In doing so, the council also ruled that an airport cabby cannot refuse service to any customer.

That’s the good news. But with the imposition of this service charge and a recent 17% fare increase, it’s getting to the point where it just may be cheaper to rent a car at the airport.

And the next time you make a reservation for a hotel or motel room, remember that the quoted nightly rate will probably not reflect the true cost of the room. Always ask what the room tax will be. A growing number of U.S. and foreign cities impose an occupancy tax that can be costly. In fact, the extra room tax can sometimes be considered downright robbery.

For example, a regular room at the Inter-Continental hotel in New York is quoted at $230. But that’s not the true cost of the room. Exclusive of any other charges you might have, such as room service, laundry, et al., the real cost of your room is $262.47 a night.

How did that happen? There’s an 8.25% city sales tax. There’s a 5% city hotel room tax. And, to add insult to injury, there’s an additional $2 per room per night “city service fee.”

New York’s 100,000 hotel rooms enjoyed an average of 72% occupancy last year. It doesn’t take a mathematical genius to figure out what the combined sales and hotel taxes earned the city in revenues. And, given the occupancy statistics, here’s an even easier deduction: the $2 service charge took unsuspecting travelers for an extra $144,000 each night.

New York isn’t alone with high surcharges and fees. Hawaii also can claim a heavy hotel room tax.

And hotel room taxes and services fees assessed by foreign governments come close to gouging. How’s this for outright abuse:

Thailand charges a 21% room tax.

In Belgium there’s a 7% tax, a 16% service fee and a 6% value added tax.

In Italy there’s an 18% value added tax on each hotel room per night.

Turkey has a 15% service fee and a 12% value added tax.

The Philippines assesses a 13.7% tax plus a 10% service fee.

And hotel rooms in Paris are even more expensive than you thought: a 15% service fee and an 18.6% value added tax per room per night.

In addition to steep hotel taxes, the French government has just imposed a $1.20 security surcharge for every departing passenger.

More add-on charge surprises may be on the horizon.

One is a $2 U.S. Agriculture Department inspection service charge for passengers coming into the United States from outside North America.

And here are two proposed charges that can only be described as funny, if not totally absurd:

The American Society of Travel Agents (ASTA) proposed a special ticket surcharge of 25 cents. Travel agents, apparently tired of being blamed (and in some cases taken to court) when airlines for which they wrote tickets failed, want a surcharge to provide insurance for passengers stranded as a result of an airline’s default.

Finally, the United States wants to impose a $1 international ticket-writing fee for U.S. airline and cruise passengers. The projected $24 million raised by the $1 per ticket fee would fund the U.S. Travel and Tourism Administration, a government agency that exists to promote travel to America. Wow.