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5% UK hotel service charges seem to be spreading

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18 months ago, we wrote about an annoying new habit turning up at high-end London hotels – an ‘optional’ 5% service charge.

With London’s top hotels now selling for over £1,500 per night (for basic rooms) over the Summer on peak dates, you might consider this a little greedy. It is, of course, optional because it isn’t disclosed in the headline price you are shown when you book.

A friend flagged that the habit has now spread to Four Seasons Hampshire, probably the best luxury weekend break option for families near London.

UK hotel service charges are spreading

This is, to be honest, a bit underhand for a brand like Four Seasons.

They don’t even pretend that the ‘service charge’ goes directly to the staff. To quote:

A discretionary Service Charge of 5% of room rate (inclusive of applicable taxes) will be applied to all reservations. This charge is in addition to the room rate per night. This charge is intended to cover a portion of costs associated with our employees.

I think you can happily say ‘No’ to this one without much ill feeling.

(PS. If you are booking a stay at Four Seasons Hampshire, you should use our luxury hotel booking partner Emyr Thomas who is a Four Seasons Preferred Partner. He can usually match any offer on the website, include ‘4-4-3’ or similar deals, you pay on departure as usual and you’ll get free breakfast, $100 of hotel credit, an upgrade if available and other benefits. You can contact Emyr via this form.)

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Comments (145)

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  • SB says:

    Great Scotland Yard (Hyatt) in London has recently introduced this 5% policy but easily deducted

  • Gordon says:

    I’m in the U.S at the moment and this awful habit of tipping should stay here, Employees should not have to expect a customer to make up their wages, By all means tip if you receive very good service but it should not be forced upon you.Their employees should pay them a decent salary. I was talking to a server a couple of days ago that said their wages are minimal.

    I am returning to Las Vagas in a couple of days staying at the Aria property $1,400 for 3 nights within that is a $50 pn resort fee which is mandatory not optional? So it’s only a mater of time before the UK hospitality industry will be contaminated by these nickle and diming back door fees….

    • Rob says:

      Federal minimum wage for serving staff is $2.13 (£1.88) per hour.

      • Rui N. says:

        With the caveat that if tips don’t make it over the minimum wage, employers have to pay the difference.

      • Sharka says:

        Most states have higher levels, e.g, NY $14.20, so this is a misdirection.

    • TGLoyalty says:

      Obviously it won’t because the UK has a decent enough minimum wage law especially vs USA

      US depends on the states and only some employers must pay the $7.25 per hour minimum set by the federal government but I’m sure “tipped” employees must only be paid something stupidly low like $2 per hr.

      • Rui N. says:

        No. They must receive at least the minimum wage. If tips are not enough, employers have to pay the difference.

        • TGLoyalty says:

          Yes but that’s why they need customers to find the difference with 20% tips …

      • JDB says:

        In many states the concept of a lower wage if you are eligible for tips has been removed. The minimum hourly wage in New York State is $15, in California $15.50 but in Florida currently only $11 but set to rise to $12.

        • TGLoyalty says:

          Then I’m surprised venues in these states continue with 20%+ service charges if the minimum is a more liveable wage.

      • Gordon says:

        My concerns were to Robs article re the 5% service charge.

        “A discretionary Service Charge of 5% of room rate (inclusive of applicable taxes) will be applied to all reservations. This charge is in addition to the room rate per night. This charge is intended to cover a portion of costs associated with our employees”.

        So it looks like it’s already happening I’m afraid?

        • Gordon says:

          Meant for TGLoyalty*

          • Gordon says:

            Also I am just leaving cancun and there’s an Environmental fee payable pn, albeit a couple of dollars, But Just another cost I thought I would mention. This has been in operation for a quite a years now.

          • Gordon says:

            Quite a few years now*

          • TGLoyalty says:

            Theresa law that’s in the last stages of being passed that states 100% of the service charge must go to employees.

            But there’s a difference Vs USA. We have a much higher minimum cash wage … tips won’t be relied on to get the staff to that minimum, tips are all over and above probably to get them to a more livable wage especially in London.

        • Lady London says:

          discretionary=you are legally entitled to refuse it. And I would. Every time. If they want that money then European law (that UK still has) is that the full cost must be displayed in the rate sold. (And must include VAT to a consumer.)

          If anything extra tries to be added later, then unless it’s as a result of govt legislation, then you are entitled to refuse it.

  • TGLoyalty says:

    pretty sure all service charges in the UK must go to employees – by “covering costs” I’m assuming its a way of topping up above the min wage to give staff a liveable “wage”

    service charges also exempt from VAT unlike the rest of the nightly rate.

    • Rob says:

      No, they can go wherever. The Employment (Allocation of Tips) Bill 2022-23 is still winding its way through Parliament but when passed will ensure all charges go to staff.

      • Ryan says:

        I work at a chain (c. 230 sites) of restaurants and deal with how we pay out the tips.

        100% of tips go to employees, that includes card and service charges (cant comment on cash), this is a company wide policy but I am aware that this is actually quite rare

        • TGLoyalty says:

          Thought I replied to robs post.

          After the awful publicity hospitality got a couple years ago for keeping tips most of not all decided staff will get tips but a law is currently being passed to ensure that happens.

          3rd reading in lords yesterday I think.

  • NFH says:

    Additional service charges, whether in hotels or restaurants, serve two disingenuous purposes:

    1. To give a misleading indication of price, whereby the advertised headline price is lower than the total price that the establishment expects to be paid, which distorts competition.

    2. As a VAT dodge, whereby VAT doesn’t apply because the service charge is allegedly discretionary or optional, despite being automatically added.

    I wish these disingenuous additional service charges would be banned in UK consumer law. The headline price of a service should always be the full total price including tax and service, whether it’s a train fare, airfare, restaurant meal or hotel stay. All of these are services, so how can there be a “service charge” on top of the charge for a service? Semantically it makes no sense.

    If there’s a problem with the quality of a service, then Section 56 of the Consumer Rights Act 2015 already gives the consumer the right to a price reduction. There’s no need to add to the headline price in respect of normal quality of service.

    Businesses should advertise the total price that they expect to be paid instead of advertising lower prices and then adding automatic additional charges that consumers feel awkward about requesting to be removed.

    • Man of Kent says:

      Agreed – I think a lot of this has also been driven by the popularity of price comparison websites where hotels, airlines, car hire as well as insurers and others strip out everything they can to make the headline price as low as possible in order to appear near the top of the search results. You need then to work out what you need to ‘buy back in’ in order to get the product / service you wanted in the first place (or what the vendor expects) in order to to be able to compare like with like.

    • lumma says:

      The reason why they’re discretionary is to avoid VAT, if you add service charges to the headline price, either the price needs to be higher to cover the additional VAT or either the business or employees lose out.

      I’m not sure I agree with these charges being added to hotel stays but one major benefit of SC on restaurant bills is to make it a lot fairer on both staff and customers. If a waiter keeps all their tips they can feasibly make £200 a day in a busy restaurant where the kitchen get diddly squat and it also stops certain customers getting preferential treatment as the waiter sees them as big tippers (usually Americans)

      • Chrisasaurus says:

        You’d get the same benefit by stopping tips altogether of course.

        And ~16.67% of 5% is not a massive difference to be worried about vis your comment about VAT on discretionary charges.

        • tony says:

          16.7% of 5% of free money is a sh!t load of cash for doing nothing. It’s the same as insurers leading admin feed to avoid IPT. I mean, why wouldn’t you?

        • lumma says:

          I’ve read in the past that a 12.5% discretionary service charge would need to be around 20% on the menu price for the staff to earn the same. That because as well as the VAT saving, tronc payments are also not subject to national insurance contributions

        • TGLoyalty says:

          You understand you will pay more for the meal anyway

          And no it’s not just vat it’s employers NIC on top.

  • BlueThroughCrimp says:

    Direct to Heathrow from Dundee? Teckle!

    • VSCXFAN says:

      ABZ-based Air Ecosse used to fly Shorts SD300 LHR-DND (via CAX, delivering Deputy PM Willie Whitelaw to his constituency) in the 70’s.

      • BlueThroughCrimp says:

        I flew Air Ecosse from Dundee to Aberdeen and return when I was a kid, when my Travel Agent dad had a meeting with them up there.
        Still have the wee AE wings badge I was given somewhere.
        They also did Dundee to Esbjerg at one point.

    • Simon Miller says:

      Lols at teckle! Dundonian here!

  • Flying Scotsman says:

    Got caught out with a similar charge at Radisson Blu on Bond street a while back. Saw the ‘discretionary charge’ added to the automatic bill and was going to ask for removal at reception but didn’t in the end as long queue and rushing for plane. Annoyed at the time ! Should have followed up by email with them but never got round to it.

  • Wally1976 says:

    I forget which company it was (maybe Uber Eats?) but a few weeks ago we were asked (in an app or online) for a tip before we’d even received the service. No way I was paying that and it put me off giving a tip after we had received the service too!

    • BlueThroughCrimp says:

      Deliveroo does the in app tip when ordering

      • Wally1976 says:

        That’s probably what I’m thinking of. Ridiculous!

        • Chrisasaurus says:

          Fun fact is that the drivers see the tip too ahead of time so it is said that orders with low or no tips wait longer for drivers

          • meta says:

            If delivery is longer than estimated at the time of ordering, I report it to Deliveroo and they usually give me back some credit. Important to take screenshots.

          • Dave says:

            Agree. I’ve long worked out that an up front tip makes it more likely the rider will wait at the restaurant should the food not be ready. No tip usually means “we’re trying to find another rider”

          • Wally1976 says:

            I’ll be avoiding Deliveroo in future on this basis.

          • lumma says:

            I’m not sure it’s the still same but I remember Deliveroo doesn’t offer the chance to tip after delivery where Ubereats does. Why would you add a tip before the event?

      • Londonsteve says:

        On the very rare occasion I go to the local McDonalds I’m always an ‘eat in’ customer. I cannot help notice how slow service is these days, it’s clear that drive-thru and delivery app orders are being prioritised over walk in customers, which is just daft for a ‘fast food’ restaurant. I won’t be eating in a McD again unless I’m desperate, nor will I be ‘driving thru’ and I certainly won’t be ordering anything on an app at double the price. I’ve had faster service in restaurants with waiter service compared to McD in the last year.

  • Paul says:

    It looks like the new Loganair routes are now bookable on BA codeshares without a connection to BA. Just booked a return to Derry for this summer. Looking forward to visiting for the first time.

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