New hotel credit card fees could hammer your hip pocket

By Chris Chamberlin, September 2 2016

Hotel chains nationwide including Accor, IHG, Rydges and Starwood are amending their credit card fees in line with the Reserve Bank of Australia’s reforms on credit card surcharging.

As a result, many hotel guests will now pay a lower credit card fee when using Visa or MasterCard, but whip out an American Express or Diners Club card and the surcharge you’ll pay with some chains has just doubled.

Australian Business Traveller drills down on hotel credit card surcharges across a number of the nation’s largest chains and shows what you can now expect to pay on check-out.

Accor Hotels

Includes Sofitel, Pullman, Novotel, M Gallery, Mercure, among others

All card types (incl. AMEX & Diners): 1.3%

Accor's new fee comes as good news, replacing the previous 1.5% charge.

Four Seasons Hotels and Resorts

  • Visa: 1.9%
  • MasterCard, American Express, Diners Club & JCB: 2%

Compared to Four Seasons' previous 2% surcharge across all card types, the only winners here are Visa cardholders by a slim margin, while all other customers continue to pay the same fees.

Frasers Hospitality

Includes Capri by Fraser, Fraser Suites, Fraser Place

These brands continue to charge 1.5% to process all credit cards.

Hilton Hotels and Resorts

Includes Hilton, DoubleTree by Hilton

At the time of writing, the chain’s existing 1.5% surcharge remains in place for all card types.

Hyatt Hotels

Includes Hyatt, Park Hyatt, Hyatt Regency

There’s currently no change to the existing 1.5% surcharge for Visa and MasterCard and 3% fee for American Express and Diners Club, except at the Park Hyatt Sydney where all surcharges are waived.

InterContinental Hotels Group

Includes InterContinental Hotels and Resorts, Crowne Plaza, Holiday Inn

  • Visa & MasterCard: 1.5%
  • American Express & Diners Club: 3%

Guests using AMEX and Diners Club cards now stand to pay twice as much in processing fees than before (previously 1.5%), while there’s no reduction in fees for Visa/MasterCard users.

Marriott International

Includes Marriott, Courtyard, Autograph Collection

  • Visa, MasterCard & AMEX: 2.5%
  • Diners Club & JCB: 3.3%

While guests won’t pay more to use an American Express card over Visa or MasterCard under Marriott’s new fee structure, the base 2.5% fee is an increase to Marriott’s previous 2% charge for all card types, with Diners Club and JCB users slugged considerably more than before.

Parkroyal Hotels & Resorts

  • Visa & MasterCard: 1.1%
  • American Express & Diners Club: 3%

With a previous 1.5% surcharge across all cards, Visa and MasterCard users are slightly better-off while AMEX and Diners Club cardholders will now pay twice as much in fees.

Rydges Hotels and Resorts

Includes Rydges, QT Hotels and Resorts, Art Series, Atura

  • Visa & MasterCard: 1.18%
  • American Express, Diners Club & JCB: 3.5%

That’s good news for Visa and MasterCard users compared to the group’s outgoing 1.5% surcharge, although there’s no fee reduction on AMEX and Diners Club transactions.

Shangri-La Hotels and Resorts

Includes Shangri-La, Hotel Jen

You’ll continue to pay a 1.5% fee on all card types at these hotels.

Stamford Hotels and Resorts

Includes Stamford Plaza, Sir Stamford, Stamford Grand

  • Visa & MasterCard: 1.16%-1.3% (varies by hotel)
  • American Express & Diners Club: 3.09% (all hotels)

Fees now applied to Visa and MasterCard transactions prove lower than Stamford’s previous 2% flat charge across all cards, while AMEX and Diners Club users face a significant fee hike.

Starwood Hotels and Resorts

Includes Westin, W Hotels, Sheraton, Four Points by Sheraton, Aloft

  • MasterCard: 0.8%
  • Visa: 1.1%
  • American Express, Diners Club & JCB: 2.9%

That’s another big hit for American Express and Diners Club users with fees near-doubled against Starwood’s previous 1.5% charge for all card types, although fees on MasterCard transactions have almost been sliced in half, with savings for Visa cardholders too.

More on the RBA's credit card reforms:

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Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!

deanr

deanr

04 May 2015

Total posts 231

Why is Starwood charging less for MasterCard than for Visa? I thought they were usually the same?

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

Fees between Visa and MasterCard can actually differ slightly, but it's worth pointing out that Starwood also has separate agreements with MasterCard for things such as the free SPG Gold status upgrade for World MasterCard users, so I wouldn't be surprised if Starwood also took the opportunity to negotiate a more favourable transaction rate.

Chris Chamberlin

Chris Chamberlin

24 Apr 2012

Total posts 2951

Also: we've just added in Four Seasons Hotels and Resorts which too has different fees for Visa and MasterCard.

daveozsydney

daveozsydney

17 Jun 2014

Total posts 44

These fees are way above what the hotels could negotiate. If a small trader can pay 1.9% for Amex with Square payment processing then a volume processor could could a much better rate. I think the ACCC needs to look into this.

According to the ruling the definitions are as follows:

Acceptable costs will be limited to fees paid to the merchant's acquirer (or other payments facilitator) and certain other observable costs paid to third parties for services directly related to accepting particular types of cards.

i.e. can no longer claim labour costs etc of processing

The Government has given the Australian Competition and Consumer Commission (ACCC) investigation and enforcement powers over cases of possible excessive surcharging.

I would determine this as excessive. It will also drive people to book through travel aggregators to avoid these fees even if status will not be honoured in some cases.

moa999

moa999

Qantas - Qantas Frequent Flyer

02 Jul 2011

Total posts 1379

Complete crap that all these major hotel chains are substantially higher than the airlines (particulary given hotels generally insist on card present verification when you check in).

I hope the ACCC makes an example of someone.

jorgb

jorgb

23 Feb 2016

Total posts 34

You know you're bad at business when instead of profiting from the service you're selling, you defraud your customers by passing on an inflated transaction fee.

pearsonlive

pearsonlive

10 Jul 2015

Total posts 9

Merchant fees are a cost of doing buisness and should be built into your pricing just like wages, insurance and electricity. I'm sure the hotels would be the first to complain if more people started paying by cash. 

markpk

markpk

Qantas - Qantas Frequent Flyer

29 Nov 2013

Total posts 456

Unbelievable...

AMEX just sent me an offer to fix my AMEX merchant fees at 1.8% - down from 1.95% - I transact maybe AUD 100k per year with them...

These hotel groups are basically ripping off guests:

  • Hyatt
  • Intercontinental
  • Marriott
  • Parkroyal
  • Rydges
  • Stamford
  • Starwood

Are these hotel groups seriously saying that the rate AMEX charges them is 3%? 

flyOFTEN

flyOFTEN

24 Apr 2015

Total posts 129

amex thru paypal for a small business from 1.95% & less. So a big business should be able to get this lower.

Tsimgore

Tsimgore

21 Jul 2015

Total posts 1

This is the tip of the "rip off" iceberg as everybody requires a credit card payment

My recent trips to Fiji  NZ & PNG experienced markups now starting 3% upwards to 5%..and that is just for Visa. No establishments take AMEX.

Merchant fees are a cost of doing business and should be built into pricing just like wages, insurance and electricity!

doot

doot

01 Feb 2016

Total posts 5

Tell the hotel you won't pay the fee and watch it magically disappear.

Credit card fees are for suckers.

markpk

markpk

Qantas - Qantas Frequent Flyer

29 Nov 2013

Total posts 456

And watch your chance of a room upgrade magically disappear! 

asw

asw

Singapore Airlines - KrisFlyer

08 Aug 2012

Total posts 34

Once the ACCC regulated merchant cost, the incentive to bargain with card program fees were eliminated.  Hotels, etc. can argue this is their true cost.  Perhaps an unintended consequence.... or not..  Pity the consumer.

Polbathic

Polbathic

Virgin Australia - Velocity Rewards

15 Jul 2016

Total posts 13

Currently in Iceland where on both Visa and Amex transactions for large and small items (accommodation, travel, food and beverage) there had never been a hint of or request for a surcharge. Pretty much every transaction is cashless from the biggest to the smallest vendor. As many have already argued the higher fees are either rip offs or sheer vendor laziness. The fees are a cost of doing business and if you are good at business you minimise your fees.

markpk

markpk

Qantas - Qantas Frequent Flyer

29 Nov 2013

Total posts 456

So I was thinking about this further and decided to run some hypothetical numbers based on one example - the Rydges group and what their surcharge revenue... fair cost recovery surcharge equates to on a monthly basis...

About Rydges Group

Rydges has 40 hotels in Australia, many of which are in business-centric locations.

Room Nights + Revenue/Room = what? 

If we assume each hotel has an average of 200 rooms lets do some math re what their 3.5% surcharge means…

Firstly, I'm assuming AMEX payments for room+ charges are predominantly business focused so I've assumed that in a 30-day month, 75% of nights are potentially business centric - meaning a majority of room nights would be for business travellers.  

So now we have a total of 240,000 room nights (40 hotels x 200 rooms x 30 business days) with 75% assumed as business related =  180k room nights.

So we have 180,000 room nights where a room charge needs to be settled by a credit card – PER MONTH.

Clearly not everyone wants to stay at a Rydges hotel, so lets assume an average occupancy rate of 85% (so now we are down to 153,000 room nights), and also not all rooms are booked directly with Rydges, so lets assume 50% of rooms are booked and pre-paid via third party sites like Qantas.com, tripadvisor.com.au, or wotif.com.au.

So now we have 76,500 room nights per month that need to be settled directly with the Rydges group.

Now, lets assume an average room rate of AUD 190/n (so in this example room rate assumes room + bar + restaurant + parking) and assume AMEX accounts for 33% of transactions (i.e. one third of business related payments)

So, of the 76,500 room nights, 25,245 are paid with an AMEX card. 

So 25,425 room nights at AUD 190 per night is AUD 4.8m PER MONTH.

So I'm assuming they clear and settle AUD 4.8m per month in revenue via AMEX cards. 

Now Rydges are hardly your local B&B. In fact, on their website they state:

From Sydney to London, we offer reliable value and just the right balance of personal space and individual attention.

So What Does a 3.5% AMEX Surcharge Mean?

3.5% of AUD 4.8m is AUD 169k (and change) – per month just in AMEX surcharge payments.

Clearly there will be other charges or costs per month for their group – such as terminal charges, fraud chargebacks; but is Rydges seriously asserting that their reasonable costs per month to accept AMEX credit cards is AUD 169k-ish? 

Per month...

My conclusion is that Rydges and their hotel mates are comfortable that they can argue that it costs them annually, something in the order of AUD 2m to accept AMEX cards... 


WOW!


doot

doot

01 Feb 2016

Total posts 5

It appears each hotel chain has a different methodology to arrive at their %, because - let's face it, they would all be on some of the best rates given their brand and annual transaction volume.

Rydges may have a higher domestic card volume which is less than Four Points which is likely >80% international premium cards and therefore attract a higher rate.

Either way - I'm calling total BS on any type of credit card fee.

Andrew1970

Andrew1970

Qantas - Qantas Frequent Flyer

26 May 2014

Total posts 6

This sort of fixed % fee, well actually it's a price gouge, is one of the things that irritates me so much. Most of the time it's passed on to my employer because 90% of my travel, is for business. Imagine how much the collective "payee" companies would save on employee travel costs per staff member across Australia if the surcharges, oops price gouges, were less !! 

And another point of irritation, is that surely if I stay 1 night or 10 nights the "actual" cost to process a transaction onto my AMEX card is the same for the hotel, so I don't actually object to paying $3 for a $200/night stay, but for multi night stays that adds up to a very large surcharge - I mean price gouge !! If it was a flat $3 or $5 per stay, that to me would make more sense, because when I stay multi nights, it's not like they bring out the gold plated Amex machine for me to swipe at checkout time ;-))

gpappy56

gpappy56

Qantas - Qantas Frequent Flyer

27 Dec 2013

Total posts 1

Here is another hypothetical for you. Lets just say our local Rydges has 300 rooms, which it probably has.

Let's also assume that all the guest have decided that because Rydges is gouging us on credit card fees they are going to pay cash instead and the average bill comes to $200, which is probably conservative.

So, guest after guest come to the counter with cash (preferably $5 notes as it takes a lot more effort to count these) by the end of checkout we have some $60,000 dollars in $5 notes sitting in our cash drawer. Oh my golly gosh, what do we do now.

Quick, take the money out to the back office and we will count it, band it in groups of ten. Oh hang on that means we need 1200 elastic bands can someone whip down the road and get some more bands, then when you get back and we have finished sorting the CASH can someone give Armagard a call and get them to come and pick up the CASH so we can get it in our bank account to pay some bills.

Oh, and it appears we may have annoyed one or two or maybe three hundred of our customers by trying to milk their wallets because they had the hide to come and give us their business, so maybe we should book Armagard for the rest of the week as it may happen again tomorrow and the next day.

I could go on, but I think everyone may have the gist by now. Everytime we pay a card surcharge we are paying a fee for making the running of the reception side of the hotel much more cost effective. These clowns should be begging us to pay by card rather than crucifying us, as it actually makes their life easier.

 Yes, the card fees are a cost but so is the counting of the cash and the movement of said cash to the bank.

Perhaps sometime we should organise a national pay by cash day / week and see how they go.

markpk

markpk

Qantas - Qantas Frequent Flyer

29 Nov 2013

Total posts 456

Ozzguy

Transaction fees are based on value, not number of nights stayed! Whether they process 1 transaction or 10 is irrelevant. It's alll about the value of the transaction...

outthere1000

outthere1000

Air Canada - Aeroplan

28 Feb 2015

Total posts 25

For visitors to Australia from Canada, credit card surcharges leave a *really* bad taste, because there are no surcharges here. And how else are we supposed to pay for hotel rooms, especially if they are pre-pay rooms? We have no access to Bpay. New Zealand is the same, except that at the Auckland hotel I use the CC surcharge is 3% for all cards. So I make a point of changing money at a money-changer in Queen Street (much better rate than my CC anyway) and paying my bill in cash. Not that I like walking round with $1000 in my wallet. Maybe next time I'll pay in $5 bills to *really* make the point.

jorgb

jorgb

23 Feb 2016

Total posts 34

But it's even better when you have to pay a deposit on credit card only and you have to pay the BS transaction fee that you will not get back and you know that they are profiting from.

lathiat

lathiat

Qantas - Qantas Frequent Flyer

06 Jul 2016

Total posts 4

Looks like everyone has just taken this as an excuse to raise the AMEX fee. The laws state they can charge the lowest fee of all cards rather than the exact per card type - which it seems they were already doing. Seems for 90% here the Visa/MC rate stayed the same but AMEX moved up to its own rate. Also pretty good when you consider many international transactions charge the card holder 3% as well that's 4.5-6% they claim. Good effort.

PB57

PB57

Qantas - Qantas Frequent Flyer

08 Nov 2014

Total posts 12

I agree with others that these charges are price gouging. Would they prefer everyone deals with them in cash?  I bet not. I bet the price of taking and managing cash, including managing the security risks, far exceeds that of using electronic facilities. Maybe regular hotel stayers should "rise up" and revert to cash. That would annoy them. 

thehound

thehound

19 May 2016

Total posts 14

Forget the Amex surcharges - Marriott are charging 2.5% for Visa and Mastercard. Given that fees are now meant to reflect what they're actually paying in merchant fees, this is simply taking the pi**. Surely this deserves a complaint to the ACCC straight up? There is no way Marriott are paying 2.5% on Visa/MC.

daveozsydney

daveozsydney

17 Jun 2014

Total posts 44

Also worthy of mention is the other price gouge when travelling outside Australia - Dynamic currency conversions. When paying by a non local card, many hotels offer choice of currency which of course earns them fat commissions if you choose your home currency plus you often still get billed for an overseas transaction so roughly 3% plus roughly another 3%. Usually I pick this up on checkout. I booked a prepaid rate with one chain's app and either didn't see or it wasn't made clear that this is what was going to happen. What is it with their business models that this element has to be done as an often hidden and spurious charge.

Agree with other commentors that there is now no incentive for these businesses to negotiate their fees down, instead it could be charge us 4% cc fees and we pass on directly and potentially within the law but give us a free 10million line of credit Mr/Mrs Banker!

MEL Traveller

MEL Traveller

Qantas - Qantas Frequent Flyer

10 Dec 2014

Total posts 55

It is ridiculous that hotels charge a credit card surcharge at all. Surely 95%+ pay by credit card. It is a cost of doing business, so just include it in your room rate, and stop looking so petty.

OzDino

OzDino

Qantas - Qantas Frequent Flyer

11 May 2015

Total posts 30

Credit card transaction fees, ATM fees and bank charges are part of the biggest con job played upon by banks and merchants on consumers. The savings made by reduction in handling cash, and we're talking about the printing of money, transfer of cash, transport by armoured vehicles, bank owning or leasing premises and myriad of bank tellers and back office staff handling cash and cheques is nothing short of mind boggling. Sure banls they will argue about setting up electronic banking, ATM systems,  IT staff, significant investment in technology but this goes nowhere near the costs business and bank were burdoned with in a cash society. In bygone days every suburb, small town or regional outpost had a number of banks vying for business with bank premises, a bank manager, a significant number of staff  and some even had (by early standards) computer systems that cost far more than todays systems on an adjusted basis working at  1 millionth of the speed required today to process stransactions. Every small business had an overdraft facility to manage cash flows while cheques took 5 days to clear. They would have to handle significant amounts of cash, do daily bank runs, ensure a float of coins was made avialbale each day.  Every large company had a number of payroll staff, cash was delivered by arnoured vehicles weekly or cheques had to be drawn instead. Imagine signing 2000 cheques a month!  Hotels had banking staff dedicated to handle the large volume of cash, personal, business and travellers  cheques daily. Today bank transfers are the  norm and funds can be transferred from my debt, credit card or bank acount into the merchants account in seconds without the need to wait days for cheques the be cleared or cash to be deposited into respective accounts. Credit card interest is at 20% while interest earned in my transaction accoubnt is 0.1%.  Billions of dollars are transferred electonically overnight where banks are skimming fees equal to the national debt. We consumers are being conned in one of the biggest heists in living history - the implementation of bank and credit card fees and they simply get away with it. This requirs more than the ACCC ,it requires a Royl Commission into the practice and rorting of the electronic banking model. 


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