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

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Anyone who has travelled in Asia or the Middle East will be familiar with the concept of ‘++’ pricing. Any published rate you see for a hotel will come with ‘++’ after the price, meaning that you will also be subject to local taxes and a service charge. These are likely to add at least 20% to the total price.

This sort of pricing is illegal in the UK. Hotel pricing – and indeed airline pricing – must show all compulsory charges as part of the headline rate.

Up to a few years ago, IHG tried to get away with showing ex-VAT pricing for some London hotels on the grounds that ‘all of our guests are business travellers’. (You are allowed to show ex-VAT pricing if your advertising is aimed at the B2B market.) They don’t do this any longer.

Similarly, Trump Turnberry in Scotland had a short-lived compulsory ‘resort fee’ which was not shown in advertised pricing. This was soon stamped out.

A new enemy is now emerging in the UK, however – the ‘optional’ service charge on your room rate.

A reader recently stayed at Rudding Park near Harrogate. When he checked out, he was surprised to see a new ‘optional service charge’ of 3% of his room charge on his bill. This is separate to the service charge added to restaurant and bar bills in the hotel.

Because the charge is ‘optional’, it does not need to disclosed as part of advertised prices. It is shown in small print as part of the Rudding Park booking process.

Generously, the hotel website states that you should still feel free to leave a cash tip as well at check-out if you wish.

When our reader challenged the hotel about this, it said that ‘all the posh hotels in London are doing it’ and specifically referenced the Mandarin Oriental and The Connaught.

What this has to do with a provincial hotel in Harrogate is a different question, but it was correct. It turns out that the Mandarin Oriental in Knightsbridge now says:

Rates are per night and inclusive of VAT at the prevailing rate and subject to 5% discretionary service charge.

Over at The Connaught in Mayfair, the £618 rate for a standard room on a random day in November comes with (if you click the letter ‘i’ next to the rate):

“Rates exclude discretionary service charge at 5 percent

The brand new The NoMad London hotel in Covent Garden has also got in on the act:

“A discretionary 5% accommodation service charge will be added to your bill which is distributed amongst staff.”

To find this line during the booking process, you need to click the link which appears when you are asked to tick “I agree with the Booking Conditions” and scroll a long way through the page which appears. You will not see it otherwise.

The Ned, opposite the Bank of England, has joined in too – unsurprising as partially shares owners with The NoMad. Here you need to try even harder to find information on the charge, since there is no clickable link to take you to the booking conditions – you need to cut and paste a URL into your browser.

I don’t know if these charges are new or not. I have never paid a service charge on my room rate at a UK hotel. I wonder what happens if you book a prepaid rate? Are you given a bill at check-out for purely the optional service charge?

Given that hotels are currently benefitting from the reduced rate of 5% VAT until 31st March 2022, as well as substantially increased room rates due to post-lockdown demand (Four Seasons Hampshire now wants £750+ for a standard room at a weekend vs £350 pre-covid), adding a 3% to 5% service charge on the room rate is taking things too far.

One US hotel CEO has publicly said that he wants guests to start tipping on room rates because otherwise he will have to increase wages. With upward pressure on salaries in the hospitality sector due to a shortage of staff, the UK may be going the same way.

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Comments (250)

This article is closed to new comments. Feel free to ask your question in the HfP forums.

  • WaynedP says:

    Interesting debate. Some of my reasons for actively wanting to increase my service charges over the next 12-18 months as industry gets back on its feet are:

    1) I feel extremely fortunate to have been able to work from home without any salary interruption, but with a £2k saving on daily travelling costs. Unlike many unfortunate service industry workers already on the lowest wages, I haven’t had a single financial concern about the roof over my head, the food in my cupboards or the lights and heating in my house. In my view, unlike others less fortunate than myself, I have a windfall £2k of unneeded disposable income to share with those that patently need it more than I do. There but for the Grace of God …

    2) Wealth and profit are not dirty words, but one of their chief aims should be the progressive improvement of the human condition. Being able to play a small but active part in that ambition is a privilege, and so much better than relying on that worn out “trickle down economics” notion so often abused to concentrate more wealth in the hands of those fortunate enough to start out with it in the first place.

    3) If, like me when I had to supplement the meagre allowance my parents could afford when I was a student, you have worked in the service industry, you will know the enormous value placed on every penny received in cold, hard cash that goes straight into your pocket. It is why I always tip a minimum of 10% (even for mediocre service), or £5 on any Deliveroo etc order costing me less than £50, almost always in cash. I have doubled that during Covid and the looks of astonishment that I often get leave me thinking that I’m in a minority. That the value of that extra £5 and its impact is far higher to that person than it is to me means that passing it on seems like a no-brainer to me.

    I’m not naive about extra service charges to businesses not necessarily reaching the staff that need it most, and I do believe that shareholders in public companies should bear a big part of the restoration to profitability.

    But many businesses are owned by smaller groups of individual entrepreneurs who support many staff and suppliers and their needy families, and I wouldn’t hesitate to pay them a Covid premium of 20% on my spend on their goods and services until their economic prospects look brighter. Especially if they were patently transparent about how they distribute any such levy.

    • Harry T says:

      You do realise that a lot of businesses and people have received substantial financial support from the government over the last 18 months, with your tax money, and that we have a healthy minimum wage in the UK? I’m not making the case against your individual generosity, which sounds very genuine and kind, but I’m not generally inclined to agree that we should be making an extra effort to tip more generously and indiscriminately. I personally only tip if I receive genuinely exceptional service. I have worked and commuted throughout the pandemic and I don’t think we should be tipping more purely out of sympathy.

      In response to the article in general. If hotels and restaurants need more money to pay their staff, then I’m happy for them to increase their actual prices, rather than guilt trip us into paying extra charges.

      • TimM says:

        Precisely. Well put Harry T.

      • ken says:

        Deliveroo, Uber Eats, Just Eats are not paid minimum wage. They are (mainly) paid per delivery & a tip makes a big big difference to their night.

        Work a friday / saturday evening they should make more than £10 an hour. Struggle to make £8 (or less) at other times.

        As ever plenty of businesses / employees have been winners from the last 18 months.

        However plenty have had little to no government support.

      • Anuj says:

        We don’t have a health minimum wage, far too low, the actual living wage should be minimum wage

        • WaynedP says:

          Totally agree, Anuj. I don’t know how much of the £20.90 fee my Addison Lee driver got for a 50 minute drive through London at unsociable hours last month. I doubled my usual tip and gave her a tenner because I was expecting a £5 credit on my Amex Plat and it nearly reduced her to tears. Which really shouldn’t be the case for an hour of someone’s life at that time of night. A minimum wage shouldn’t set the maximum reward that honest, hard-working people deserve to receive.

      • Char Char says:

        Yes exactly, increase their prices but stop the guilt tripping rubbish.

        If a individual or group of people have made you feel welcome and done their job well then you are free to reward them how you choose and don’t need to be guilt tripped into it

    • T says:

      Point 2 is idealistic and unrealistic. Greed is the human condition. Those who have the power take and those who don’t get what’s left. Trickle down doesn’t happen just look at the wealth concentration going on especially during covid.

    • mr_jetlag says:

      good for you. IMO tipping practice is regressive and inequitable, and a backwards import from the Americans. We managed to stamp out smoking in restaurants, we should as a civilized society stamp out tipping and raise living wages instead.

  • Aaron C says:

    I really don’t want the tipping culture to come to the UK. Just give me a price and I’ll pay it.
    On the other hand many hotel customers currently are leisure customers who are more price-sensitive. They are likely to chose the property which comes near the top by low price on an OTA or Trip Advisor search. Using these fees keeps the property up there and gets more business.

    • T says:

      Agreed pay the staff fairly and then if they go above and beyond its your choice to offer a gratuity

    • The Savage Squirrel says:

      This makes it particularly unnecessary that the luxury £500/night bracket, to whom the lowest cost table at the OTA is irrelevant, are the ones using this tactic.

  • ash says:

    If you pay a service charge which does go to staff to subsidise wages think of all that tax they are not paying! This means you pay again to cover the tax intake shortfall. Boris if your reading Tax all service charges regardless who it goes too and maybe you won’t have the national insurance hike!!!! Or stamp it out and refuse to pay any service fee period!

    • TimM says:

      For me, ‘service charges’, ‘gratuities’, automatic tips etc. should be stamped out by law. They are part of the price. Do we really need to know the extra charge of salt, washing the rice, cleaning the table, having to go to the shop, etc. is on our bills? A thousand items could be put on the bill. No, an agreed price for an agreed service, end of. But those poor workers with long hours who give great service, etc. etc. etc. – pay them more!

      There is a trend in Turkey for tours to be advertised as “no shopping” because the cheaper tours include compulsory shopping stops the sales from which the agency gains a generous commission. ‘No shopping’ tours are therefore more desirable and more expensive.

      I can see a market for restaurants and hotels in the UK advertising “Absolutely no tipping!” as part of their sales spiel. We are not there yet though.

    • ken says:

      Pooled tips (most restaurants / hotels) are taxed through PAYE

  • Dave says:

    This reminds me of a hospital stay in China (foreigner hospital) where an American couple were next to me. They spent hours going through all the participants in his fall, rescue and recovery accurately working out how much to tip each person and debating (inflating) each one. It was tiring just listening to it.

  • George K says:

    Thank you for putting the spotlight on what originally felt like it was a series of unfortunate events, but now turning into something more nefarious.

    I’ve had this charge crop up a couple of times, but funnily enough, no front desk employee (or manager) could ever tell me what it was for. If you know that you’ve committed to an X rate for one night and the final bill comes to X+3%, then that sticks out like a sore thumb when settling the bill, whereas I’d imagine a charge of this nature is more easily hidden in a final bill that involves multiple nights and/or F&B spend.

    I always make it a point to budget for time at checkout, so I can go over the bill in peace and make sure there are no inconsistencies. I usually try to have a calculation done by myself beforehand so that any variation on the final spend is picked up easily. I’ve always told my wife that I almost envy those who will happily pay any old amount they are told to, whereas here I am quibbling about peanuts in the grand scheme of things.

    But, as always, we didn’t get where we are by working for free. Every little bit counts and helps towards the squirrelling for the next holiday. And we will decide – as we do already – who will be the beneficiary of our charitable giving. Not some hotel.

  • barnaby100 says:

    Not sure that Rudding Park would like the description of a provincial hotel. They like everyone else have staffing shortages, a lot of their unskilled staff were from the EU and they have left. Their current staff seem predominantly young and British. Not defending the charge and I have to say that I haven’t noticed it on my account. The hotel has unprecedented occupancy levels and has almost no room availability which possible indicates that guests don’t mind?

    • Alan says:

      Presumably having unprecedented occupancy/rates also indicates that they are now making money hand over fist and can afford to pay their new staff a decent wage.

      • barnaby100 says:

        As a family owned business I don’t imagine that they had an easy journey through the lockdowns.

        They had also invested in a major spa build and refurbishment in the previous couple of years and will have had no income.

        You cant sell something twice. Being full this September doesn’t compensate for having no guests at all for so many months. I suspect that occupancy rates were always quite high but there was generally some later availability- now you cant get a booking.

        I am surprised that they didn’t give a comment to HFP- I assume they were contacted. They are quite active on TripAdviser.

        • Nick G says:

          And what happened when they were making lots of money and investing in a new spa! Where they keen to offer such amazing deals so more people could afford to go? No they are a business, just like now, demand is high so prices shot up. Hotels can change what they want but customers will pick and choose in the end. I for one won’t ever step foot in RP again. Personal choice earned it’s the long working staff I feel sorry for

          • barnaby100 says:

            I am not sure when you mean they were making lots of money?
            They certainly used to have last minute offers for the hotel and Horto pre CV19 (example July 2019 £97 per person DBB and Harewood entry).

            The spa was the significant investment for the hotel. It cost almost £10 million and has had extensive remodelling work done since it first opened. The spa seems to have secured its aims to drive hotel bookings and make the hotel a destination in its own right (as opposed to previously being golf, conferences, Christmas parties and weddings).

        • Nigel says:

          Hi Barnaby
          Have a look at the Rudding Park accounts (as I did) and you’ll see a hefty ‘donation’ from the government towards their closure. The point is that hotels should pay their staff properly in the first place and if that involves putting up prices then so be it. As you know they are full (and short staffed). I thoroughly disagree with taking a tronc culture we are used to in restaurants and now applying it to hotels as an optional charge. As I understand it, topping up staff wages with the tax advantageous tronc denies the government revenue and means the employee doesn’t get benefits on that amount of pay. And however good or bad Rudding Park may be it IS a provincial hotel. I actually had a decent stay there. And finally the fact that they discount prices to maintain occupancy is a business decision. It’s not something to thank them for.

  • Nick G says:

    Having had our wedding reception at rudding park I can honestly say the place has gone down hill and prices gone up to stupid money now.

    On the subject of fees I sent rob a message a while ago to say that Hilton Syon Park now has a £20 fee per adult for using the spa (pool) on every occasion even though it no longer quotes the price and just says pool charges apply! Annoying as that’s another hotel that we’ve stayed at 4 times and it’s gone down hill!

  • numpty says:

    Time to raise the tone, have you seen the tips that given at the end of each charter on Below Deck / Below Deck Mediterranean / Below Deck Sailing?! 😉

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