Growth Of Flat Service Fees Raises Some Eyebrows

<B> Growth Of Flat Service Fees Raises Some Eyebrows</B>

By Bryant Rousseau

A fast-growing roster of resort properties is adding anywhere from $5 to $20 a night to meeting attendees' bills in the form of "service fees," and planners are taking up positions on one side or the other.

The compulsory fees, which cover such amenities as health-club access, local phone calls, housekeeping tips and newspaper delivery, are assessed as a flat rate regardless of the extent to which attendees use them. Some planners welcome the fees, believing they represent a better deal than charges rung up on a per-usage basis. But others think they unfairly pad the pockets of hotels by forcing attendees to pay for services they neither want nor use. Some planners are so outraged they have contacted attorneys over belated disclosure of the charges when no mention of the fees had ever been made in the group contract.

Love the fees or hate them, there's no question they are becoming the rule, rather than the exception, at resorts. "Service fees are a growing trend," said Jerry Janove, vice president of sales for the Resort Meeting Consortium in Cherry Hill, N.J.

"The fees are all the rage at resorts," agreed Bjorn Hanson, chairman of the hospitality division of PricewaterhouseCoopers. "Two years ago, only about 5 percent of resorts levied service fees, but now I'd say about 20 percent do. In two more years, I think 50 percent of resorts will be charging them."

The major concern seems to be not so much the money as the lack of formal notice about their existence. The Newspaper Association of America recently was charged $5 a day in Orlando for a typical assortment of goods and services: unlimited local calls, newspaper, health club admission, coffee and babysitting. There was no mention of the fee in the group's contract, said meeting manager Paula Hummel, who posted her complaint on an industry listserv, and the hotel did not mention the fee upon checkin.

Hali Cooper received a similar shock when she checked into a conference at the Buttes Resort in Tempe, Ariz., and was handed a card saying the meeting planner had arranged an $8 fee to cover bell service and tips. "I was the meeting planner and had arranged for no such thing," said Cooper, who is director of conference services for the Regional Investment Bankers Association in Charleston, S.C.

Cooper's attendees were none too pleased. "They were coming up and asking me what right I had to do this," she said. "It wasn't even about the money. It was that someone else had made the decision for them." Cooper insisted the hotel write an apology letter to every attendee, and notes were distributed under their doors, she said.

Judy Franzblau, president of Global Events in Los Angeles, discovered only when she arrived a few days before a client's conference that the Westin Maui was charging a fee. "At that point there wasn't much I could do, and I was placed in a compromising situation because I had told the group explicitly what the total rate was," she said. "I mentioned words like 'negligence' and 'fraud,' and the hotel agreed to make the charge optional at checkin."

Not all planners have been lucky enough to have the fees canceled, though. Attorney John Foster of Atlanta said he has encountered hotels that instituted fees after contracts were signed, and refused to waive or make them optional. That's unethical, he said, and it also may be fraudulent.

The best way to avoid the problem, Foster counseled, is to insert a protective clause in the contract that reads, "No additional charges will be incurred by the group or its attendees for work performed, or for services or items provided by the hotel unless the hotel first gives a quote for the work, service or item, and obtained prior written permission from an authorized representative of the group."

All the hotels in this article insisted they are upfront about their fees, and that most groups prefer to pre-pay. When Eden Roc in Miami implemented a service fee of $7 a day, for example, it gave planners with signed contracts the option of waiving it. "Ninety percent of the groups took the service fee route," said director of marketing Randy Griffin. "A guest can easily make eight or nine calls an evening. At 75 cents a call, that alone would match the fee."

Said Jerry Lango, director of sales and marketing operations for the Circon Corp. in Stamford, Conn., "My group makes calls from their rooms constantly. I added it up, and the service fee made economic sense. Accounting likes the idea too, because it's easier to reimburse."

Still, said Joan Eisenstodt, president of Eisenstodt & Associates in Washington, D.C., "if I have a group that doesn't use the phone intensively, doesn't drink coffee and won't use the spa, then the fee is a real hardship."

"The Utopia would be if hotels allowed guests to choose whether or not they wanted to pay the fee at checkin," said Bruce Schiemo, divisional vice president of travel purchasing for Minneapolis-based BI Performance Services. But hotels argue that the fee is predicated on the assumption that many guests will pay it--and an optional fee would have to be much higher.

Planners dismissed the idea that hotels lose money overall with predetermined fees, along with the notion that the fees are a response to guest demands. "Instead of nickel and diming attendees, they're now five-dollar and ten-dollaring them," said Jonathan Howe, senior partner at the legal firm of Howe & Hutton in Chicago.

Janove noted that the fees "allow hotels to keep room rates down to stay within the budget ranges of more groups, give the perception to guests of receiving a value-add deal and accrue quite nicely to the bottom line."And Knox said she recently saw a service fee for the first time at a non-resort property. That may well be a sign that the fees are making inroads into urban properties as well.