A disturbing new trend? UK hotels adding a service charge to your room rate

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• JP-MCO says:

  13 Sep13 September 06:49

  I experienced this at the Lanesborough a few weeks ago. I have stayed there many times over the years and this is an entirely new fee being added to the bill.

  • John says:

    13 Sep13 September 07:15

    Did you pay it?

    • JP-MCO says:

      13 Sep13 September 07:46

      I did. In the wider context of the total bill it was fairly inconsequential. Also, the hotel had offered us a very good rate when we asked to extend our stay whilst at the hotel which they didn’t have to do. The Lanesborough is where I stay when in London and I have a good relationship with them. Their ability to organise a stay for me at extremely short notice is something I really value.

• tony says:

  13 Sep13 September 06:57

  Shocking practice and one i’ll keep an eye out for. Am wondering however if there’s some VAT argument here – a quick google search suggests that so long as they’re not compulsory they fall outside the scope of VAT, leaving the hotelier with the option of increasing room rates by 3.6% or adding a 3% discretionary service charge to get the same financial outcome. So if more than 20% of guests refuse to pay, it’ll presumably come to a pretty quick end (and we just see underlying rates rise).

  The excuse that “posh hotels in London do it” is however risible

  • lumma says:

    13 Sep13 September 08:57

    If the rules are the same as for restaurants, then a discretionary service charge is only not subject to VAT if it’s all handed to staff as part of a tronc system. If the business keeps it they have to pay VAT on it.

    If staff are paid from this too they will receive more net pay as this money is not subject to national insurance and isn’t counted when calculating student loan payments.

• Tim says:

  13 Sep13 September 06:59

  I think everyone in the industry is facing serious pressure of rising staff wages and difficulties recruiting; my wife works in the industry and she said one their hotels needed to turn over 80 rooms with only two staff members, so everyone from the manager down had to clean rooms. I’ve heard of hotels limiting capacity; they just can’t get the staff, so I suppose this is one way of attempting to entice staff with higher wages. I absolutely hate “discretionary” service charge, which seems to be coming more common in restaurants, brought in for much the same reason.

  • Andrew says:

    13 Sep13 September 07:25

    Why not just put the prices up then if costs are rising? Not having these stealth charges added at the end.

    • tony says:

      13 Sep13 September 07:34

      See my note above – it appears to be outside the scope of VAT so for non-business travel is a cheaper (in more than one way) route to bolstering the bottom line.

    • ChrisC says:

      13 Sep13 September 08:06

      They also appear as cheaper on OTA sites when displaying the room rate.

      They also don’t get included when the OTA calculates its cut.

      Same as for resort / destination fees.

      Just tell me the total cost I’m paying to stay!

    • David says:

      13 Sep13 September 11:13

      Have you not seen hotel prices this year, Andrew? They have been put up considerably.

  • David says:

    13 Sep13 September 11:14

    Another Brexit/Covid combo dividend.

  • The Savage Squirrel says:

    13 Sep13 September 13:38

    I’ve faced rising wage costs in order to retain/recruit staff this year. I’ll bet every business has, and we all have to deal with it one way or another.

    What I DIDN’T do was try to sneak in extra charges to clients dishonestly by adding them in on top of any fee that was quoted and agreed beforehand.

• MT says:

  13 Sep13 September 07:02

  I have been staying at The Berkeley (same group as Connaught & Claridges) and the charge has been there for years, so not new for them at all and the service there is so exceptional I have never minded paying it. Equally on an occasion I did have a couple of service related issues (which the hotel sorted in no time) they removed the charge without asking me as they did not feel it appropriate to charge it.

  My understanding is the charge does go fully to the staff however and the service level is stunning. If the charges come in and your just getting standard services you would expect a hotel to provide then they shoudl be stamped out quickly or simply as people to remove the charges and inform them you will tip as you feel is appropriate during the stay.

  • Thywillbedone says:

    13 Sep13 September 07:09

    But surely the £600 odd room rate is enough to guarantee “exceptional” service?? If it is going directly to the staff, it suggests they aren’t happy = not being paid properly. It should be: pay your staff properly, charge the amount you need to make a profit and I will decide if I want to stay in your premises based on that. It is not dissimilar to how so many large companies in the UK underpay staff knowing the taxpayer will ultimately have to subsidise them.

  • Sarah says:

    14 Sep14 September 09:36

    I’m curious as to whether the staff pay income tax on the money they receive through this or if it is effectively cash in hand?

• Nick B says:

  13 Sep13 September 07:03

  The Corinthia in London add 5% to your bill as a “discretionary” service charge. VAT is then applied to it. Felt really cheeky but paid it as too embarrassed to challenge it. Because you don’t know it will be applied until you checkout, you still tip during your stay.

  • John says:

    13 Sep13 September 07:09

    Do you? I only tip in poor countries and the US, unless someone did something for me which was beyond their job description

    • Andrew says:

      13 Sep13 September 07:26

      +1. Why would you voluntarily pay more for something?

      • Paul Pogba says:

        13 Sep13 September 09:32

        In the US there is a different minimum wage for tipped jobs (I think its as low as $2 an hour) so tipping is an essential part of the workers income. It seems like a bogus set up to me, I’d rather they were recompensed fairly, and I paid the menu price but it’s not for me to impose my cultural beliefs on them.

        • LDTx says:

          13 Sep13 September 10:58

          It’s a bit more nuanced in the US, as the US govt requires a minimum wage of at least $2.13/hr be paid to employees who receive at least $30 per month in tips, but if wages and tips do not equal the federal minimum wage of $7.25/hr during any week, the employer is required to increase cash wages to compensate. Also tipped minimum wages differ greatly at the state level. https://en.wikipedia.org/wiki/Tipped_wage

        • Fenny says:

          13 Sep13 September 11:03

          In Korea we were told categorically not to tip, as it’s against their culture, but the service levels were exceptional. If the US want good service, they shouldn’t all act like spoiled brats. I’ve seen people in hotels and restaurants complaining about “poor” service and making a scene. Pay the staff to do a good job and let them do it.

          I checked out of a hotel in Chicago after a guy who had had a major rant at the receptionist and demanded money off his bill. When she asked if I’d enjoyed my stay, I said yes, I thought it was lovely, and she gave me a 10% discount! I left a bigger tip than I would have done, just because I’d seen how well she’d dealt with the other guy.

  • TGLoyalty says:

    13 Sep13 September 08:24

    Odd stayed there a couple weeks ago and no such “additional” charge. Was booked via Emyr so don’t know if that made a difference.

    • Hotelier says:

      13 Sep13 September 09:12

      Corinthia charges 5% service charge since end 2019. And as the rest of 5* Lux hotels in London that do it, it does 100% go to hotel staff.

      • TGLoyalty says:

        13 Sep13 September 16:00

        They must advertise the rate including it because I paid exactly the rate advertised.

        Isn’t what is being described by Rob in his article the underhand trick of selling you a room for £x and adding 5% on top at checkout?

        • Rob says:

          13 Sep13 September 16:05

          Correct – because if it’s not compulsory, you don’t need to show it in the rate.

• Yorkshire Rich says:

  13 Sep13 September 07:10

  I stayed at MO a few weeks back and A hefty service charge was added to the bill on check out. They said it was to pay help pay the house keeping etc, I did ask “do you not pay them or something?”

  It was my honeymoon and I must have had a bang to the head as I paid it but my wife is mentioning it everyday since. My father also said to me that they have probably framed my signature and had a good laugh as I would be the only Yorkshireman in that hotel that’s as ever paid the charge.

  • Pb says:

    13 Sep13 September 07:17

    Are you changing your Monica to Yorkshire now poor ?

  • Anna says:

    13 Sep13 September 08:11

    My OH was born in Halifax – whenever I book somewhere nice he asks “Is it on points?” 🤣

    • Anna says:

      13 Sep13 September 08:20

      Perhaps we should start a “Northerners Against Ridiculous Charges” movement. AKA “narky”!

      • Mike says:

        13 Sep13 September 09:58

        Plus sign me up – I take it will be free

    • Michael C says:

      13 Sep13 September 09:05

      Anna, if you’re ever visting that way, please pop into The Temperance Movement café by the market – run by one of my best friends who used to live in BCN! (great TR reviews so far!)

• exEDI says:

  13 Sep13 September 07:45

  Tourist attractions in London do this too. A donation is included in the ticket price by default, have to ask for it to be removed which does feel awkward.

  • Nick says:

    13 Sep13 September 08:21

    The tourist attraction one is different. If you contribute ‘voluntarily’ they can claim gift aid (if they’re a charity). If you don’t, they can’t. I don’t mind that so much.

    • Rich says:

      13 Sep13 September 09:02

      There’s a lot of attractions doing this now. Many of them are seriously stretching the idea of what a charity is! I always opt out of gift aid – no way should they be getting free top ups from the taxpayer.

      • Paul Pogba says:

        13 Sep13 September 10:51

        Why not if what they’re doing is a public good? I would much rather be able to direct 50% of my tax to charities doing work I support than giving blindly to the government to blow on follies like HS2 and royal yachts (among many other things).

      • Tariq says:

        13 Sep13 September 17:50

        I always opt in, and then the receipt goes straight into the charitable donations line of my tax return!

  • Dubious says:

    13 Sep13 September 16:40

    I’ve had a previous employer try this too – default salary deducation for the designated corporate charity….(and not doubt the company taking the PR credit)…needless to say I opted out and used the cash to make positive contributions to charities I knew more about.

    • Dubious says:

      13 Sep13 September 16:41

      *no doubt.

• PM says:

  13 Sep13 September 07:56

  If you think these service charges are distributed to staff in a fair way, so it is just a forced tip, you might want to google “Me London Hotel Protest”.

  • Anna says:

    13 Sep13 September 08:00

    Exactly – I would never be convinced that these charges would go to the lowest paid employees!

    • Hotelier says:

      13 Sep13 September 09:13

      From experience in Lux hotels they do … restaurants is another story

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