In the travel sector, many companies have significantly enhanced their profit margins and earnings by charging for extra fees. Whether it’s for baggage fees for airlines or parking or room cancelation fees for hotels, there’s plenty of space for adding on guest surcharges.
According to this recent Skift article, 2016 is set to be another record year for U.S. hotels in terms of the amount of money they will collect from fees and surcharges. In 2015, hotels collected a record $2.45 billion, and this number is expected to increase in 2016, according to a NYU study.
The surcharges began to increase between 2002 and 2009, when travel demand decreased due the economic climate at the time.
However, this rise in revenue brings up the challenge – and need for balance – when it comes to charging extra fees. It goes without saying that travelers are not too fond of these charges.
Southwest Airlines has been the purveyor in gaining traveler loyalty with its bag-fly-free policy, which has helped to create a beloved brand. This, along with the discounted fairs and the “fun and lively approach” they take towards travelers, allows the brand to standout.
For hoteliers, the brand – including everything from implementing QR codes for offers at the front desk to design elements – come from the corporate headquarters, and trickle down to the franchises. This also includes the strategies behind the development of programs to charge extra fees.
In an era where it’s hard to quantify guest loyalty, hoteliers need to take the appropriate steps to help build the brand, and not risk the loss of mindshare amongst guests by creating new fees. And, ongoing guest loyalty will ultimately result in more revenue in the long-term, as opposed to one-off fees.