Hotel Phone Bill Takes a Surprising Toll

Not long ago I checked into a large hotel in New York City. Being the sophisticated traveler that I think I am, I watched my expenses carefully. I didn’t order any room service, I didn’t get tempted by the in-room mini-bar and I didn’t select an expensive in-room movie.

I also watched my telephone calls very carefully. I only made local calls. And, when I had to call long distance, I used my telephone company credit card. I also called three toll-free 800 numbers to make or reconfirm my airline reservation.

After three days at the hotel, I checked out, convinced that the only charges would be for the room and tax.

However, a week after I returned home, I received an additional bill from the hotel for $64.03. The explanation? It was for my hotel room phone charges.

I was billed a minimum of 81 cents for each local call I had made. Some local calls were billed as high as $2. And every time I had used my credit card or had called a toll-free number I had been assessed a $1 “access” fee.

I checked the bill carefully.

It’s Outrageous

To charge 81 cents to make each local call was outrageous. The access fee to dial toll-free numbers or to use my telephone credit card was tantamount to highway robbery.

I looked at the bill again. One day, I had attempted to reach a friend whose phone was busy. I must have dialed him six times before finally getting through. Sure enough, I had been charged 81 cents per call each time I had placed the call, even though the line was busy.

What an insult. I was being billed nearly $5 simply for lifting up the receiver and dialing the number regardless of whether the call had gone through.

I had never been informed by the hotel of their telephone policy, and was now confronted by the fact that about the only thing free when I picked up my hotel phone receiver was the wake-up call.

Anyone who has traveled overseas has at least heard of (if not experienced first-hand) some hotel phone-charge horror stories. The 10-minute, $60 calls to New Jersey from a German hotel. The $100 20-minute charge on a call to London from a Dubai hotel.

In fact, overseas hotel phone rip-offs were so bad that AT&T; began to market a “teleplan” system at a number of hotels in Ireland, Israel, Portugal, Germany, Austria and in the Far East, placing limits of $10 on phone call surcharges.

If my New York hotel phone bill is any indication, it just might be easier to make local calls in Portugal. Now, more than a few U.S. hotels are charging outrageous fees and surcharges for local and long-distance calls. And, as in my case, some hotels charge the fees whether you complete your calls or not. Surcharges of 15% to 30% are typical.

But what makes their already-high charges questionable is the regulation allowing the hotels to “resell” their calls. What this means is that many hotels are now subscribing to the lower-cost long-distance services--MCI, Sprint, et al.

But the hotels charge you the more expensive AT&T; rates, and some even add on a surcharge for long-distance calls. For example, at some hotels the surcharge can be as high as 25% above the regular AT&T; rates.

That’s the bad news. The worse news is that many of these hotels conveniently forget to tell you what they charge for local or long-distance calls until you see the unpleasant figures on your bill. And by then, it’s often too late.

It’s not surprising that in a recent survey by Consumer Reports, asking readers what annoyed them most about hotels, more than half the respondents listed the hotel phone fees and surcharges as the “leading irritant.”

Hotels claim they don’t make money on phone calls made by guests, even with the additional fees and surcharges.

“The phone system is a losing proposition for us,” argues the general manager of one 600-room hotel in Los Angeles. “We just put in a new system. It cost us $250,000 to install, and we’re just trying to cover those costs and break even.”

Maybe?

Maybe not. You don’t have to be a professor at Caltech to make the case that this new phone system can soon become a major profit center for the hotel.

I’ll use the 600-room hotel as an example. I’ll also assume the $250,000 installation charges for a new system, and I’ll even add a generous $350,000 a year for support charges (telephone operators and maintenance). That means $600,000 in costs to the hotel for the first year and $350,000 thereafter.

Benefit of the Doubt

And, to give the hotel every benefit of the doubt, let’s say that the hotel is never more than half occupied and that there is only one guest in each room. I will also assume that each of the 300 guests is very cost-conscious, makes only five local calls per day and never makes a long-distance call, dials a toll-free number or uses a telephone company credit card.

Based on the 75 cents per local call charge, that’s still a charge of $3.75 per day per guest, or $1,125 per day directly to the hotel.

In just one year, the hotel has earned $410,625 just from local call revenue. By the second year, the hotel has fully paid off its installation costs and has covered virtually all of its annual staff and maintenance costs. In the third year, the hotel makes a tidy profit that just keeps growing.

And all this assumes that the hotel is only half full and that the guests haven’t made even one long-distance call.

Now, let’s assume that the guests do make one long-distance call per day, but that each uses a telephone company credit card to make the call or calls collect. On access fees alone, that adds nearly $110,000 in annual revenue to the hotel.

Should the guests dial the long-distance calls direct from their rooms, additional surcharges (over and above the long-distance charges imposed by the local phone company) apply to further increase the hotel’s income.

In reality, most hotel guests make more than one long-distance call and more than five local calls per day. Thus, the hotel profits from phone calls can be that much greater.

To protect yourself, upon checking in to a hotel you should insist upon a simple breakdown of their phone rates.

But don’t stop there. Keep a log of the calls you made while in your hotel room and when you made them. Then scrutinize your bill carefully. You should ask the hotel to provide a readout of each call, the number called and the length of each call. Be prepared to challenge the hotel on questionable charges. If you paid with a credit card, you can dispute the bill later if the hotel doesn’t satisfy you.

If you had lunch at a restaurant and were charged for caviar you didn’t order, you would dispute the bill. Shouldn’t you do the same with a hotel telephone bill?

After all, at the prices charged for most hotel telephone calls these days, someone, it seems, is eating a lot of fish eggs.