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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.

  • James Harper says:

    I take the view that optional service charges are exactly that and I always insist they are removed from a bill wherever I am. It’s the hotel or restaurant’s job to pay their staff appropriately from the rates they charge. If I wish to reward service which is over and beyond, then I always carry some cash.

  • PM says:

    A lot of hotels locked their doors for covid, put staff on furlough, used government loans and grants to do refurbishments, stopped paying suppliers or renegotiated deals. Business rates reductions and tax incentives were fully taken advantage of.

    While this was happening managers were contemplating how to reduce further their costs under the cover of usual environmental sustainability and now covid safety. No plastic, no toiletries, no towels changing, less water pressure, reduced heating for a shorter period, fewer amenities, closure of lounges, no buffets etc.

    While saving brigade was doing well, the revenue team did not waste their time either. Dining service charges, tray payments, water bottles in rooms you need to pay for, dynamic pricing in F&B outlets, forcing own currency exchange rates on terminals, premium rate phone numbers, upgrade gaming solutions etc.

    It is all to either “save the planet” or to “support the industry so affected by covid”.

    Since we are accepting this, shareholders are happy and corporate offices are incentivise these “hoteliers” to push further and this is where room service charges come from.

  • Dubious says:

    but….what if putting up all these prices to cover the real costs leads to an increase in points cost for redemptions!

    (I jest).

    • Sam says:

      Remember this is not a government tariff nor a fee they must charge in the room rate. If they want more money from how much they charge they would do THIS and then increase the base rate which means that redemption rate would increase anyway.

  • Lou says:

    What I don’t understand. You stay at a prem Inn, and they fall over backwards to make your stay as pleasant as possible. £50/night, no service charge. But as soon as you’re looking at £300/night, they can’t find enough money to pay the staff well and they’re looking to you to top up the pay packet?!

    • Memesweeper says:

      Precisely. It’s the higher end places that will try it on, because they can.

    • Sam says:

      This is why I have stopped paying for expansive hotels. Mid range hotels at around £80 per night at a Hilton or Doubletree is my go-to, if I need to spend a night elsewhere. Since covid has started I have realised how much I have spent in the past for a one-night life on luxury could have been well spent on my long-term home improvements.

    • PM says:

      Premier Inn is honestly priced and gives you a room to sleep. Five star hotels sell you an experience, of being well off, of being superior, not needing to see the little people.

      They know too well you won’t blink in front of a five quid mineral water, that you will enjoy tapping your platinum card for £25 a pizza, and that you won’t challenge a dishonest service charge added to the bill.

      The difference between premier inn and posh hotel room is only in ego of a guest.

    • Dansk says:

      100%! I had to stay in a Travelodge on Friday for work, markedly better service and equally clean/comfortable room compared to the usual £250/night place that was fully-booked my work usually puts us in. I agree the situation in the US is different, as it’s essentially a wage – in the UK it just feels like indiscreet price gouging

  • Roostee123 says:

    I went to the Ivy in York last week & they had a 12.% service charge, I asked the waitress if she get’s this.
    She informed me that she got some of it but it gets filtered down through management and then to her. BUT if I tipped her direct she gets it!

    • Kipto says:

      Good to know when I use my Platinum Amex £200 credit at my local Ivy restaurant next month.

      • Roostee123 says:

        That is why I asked. She had no problem taking it of the bill and adding it to the card machine. She was very honest about it though

    • The Savage Squirrel says:

      A work colleague’s relative works at a locally well known restaurant. She showed me the split of the card tips used by management to apportion tips collected. Three (already well paid) managers not involved in service at all get 10% each. Then there was a split through various staff including kitchen staff (fair enough) and admin/maintenance (not fair enough) The relative was a “bottom rung” waitress and they got 0.9% of each tip given.

      Cash is still the way….

      • Lady London says:

        Yup that’s the old pretty much discredited tronc system. I remember for some reason, apart from managememt, the wine waiter hierarchy used to do astoundingly well out of it

    • James Harper says:

      Thanks, I’m there for lunch one day next week, I’ll have the service charge removed and hand over some cash.

  • Sam says:

    It’s not that deep to be fair. At checkout just ask for the service to be taken off bill. I feel no shame about this, it’s not like I go a restaurant I need to confront with that nasty face of waiter. Instead it’s the front desk people who need to confront with me about something they should feel guilty of.

  • MichaelH says:

    I’ve just booked to stay at The Stafford which also has the 5% service fee. I’d actually be happy to pay that if it was then understood and accepted that I wasn’t going to tip at any other stage – i.e. doormen, concierge, housekeeping etc. Perhaps I’m too British in that I just don’t enjoy tipping – the decisions, the handover, the awkward expectation (as per an earlier comment on this thread – this alone is a great reason to travel to Japan). A 5% service charge would be fine to avoid all that. But I’m never quite sure if that is what it implies…

    Would be interested in others’ views – if you know there’s a discretionary service charge would you still tip during a stay?

  • Joe says:

    Service charges etc are just a blatant admission that you don’t pay your staff properly. I’m surprised any self respecting organisation doesn’t feel embarrassed asking for it. It’s the job of the employer to reward staff who provide their customers with top service.

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