Going on vacation is expensive. Paying for accommodations, travel, activities and outings, not to mention the opportunity cost of missing work, adds up. When budgeting to go on your next trip there are several costs people commonly overlook - and the results are, well, costly. Read on to find out where travel, accommodation and entertainment providers tend to hide fees and how you can find them.
The airline industry is perhaps one of the most notorious for implementing fees that are not reflected in the initial quoted purchase price of a ticket. Luggage check-in, which was free a couple years ago, now can run over $25 per suitcase. For a traveling family of four with two suitcases each, this unexpected charge can quickly put some strain on a vacation budget.
Debates concerning lavatory usage fees have also recently emerged. Ryanair (Nasdaq:RYAAY), for example, announced in 2009 that it's considering charging passengers approximately £1 (US$1.50) for using the bathroom on short flights. Coin operated doors will provide access to the facilities. Although, this is more of an inconvenience than a budget concern, just remember to bring your change with you - especially if you have kids.
Airline companies claim that charging for luggage encourages passengers to travel light, while bathroom fees encourage them to use the facilities in the terminals. Regardless of whether these fees are legitimate, they can make what appears to be a cheap ticket much less affordable. (For more insight, see 7 Air Travel Perks That Used To Be Free.)
Hotels are less known for hidden fees, but the industry is expected to start bringing them in 2010. According to New York University's Tish Center for Hospitality, surcharge revenues are expected to amount to $1.7 billion in 2010, a 12% increase from last year.
Where will this extra revenue come from? Experts suggest fees are likely to be tacked on for luggage storage, mini bar restocking and housekeeping charges.
In addition, a major concern with hotels introducing these small fees is that they can escalate to the point where hotels may eventually charge for services that are currently provided for free. Swimming pools and gyms are expected to remain free of charge through 2010, but depending on the success of other fee policies, they might eventually become an additional room expense.
When traveling by car, bridge tolls are an unavoidable expense. New York and California have a handful of bridges that charge passengers a moderate toll to cross. New York's Verrazano-Narrows Bridge, which connects Brooklyn to Staten Island, carries a toll of $11, while those driving on the Golden Gate Bridge must pay $6. Although these amounts may not be considered a substantial vacation expense, the eight-mile Confederation Bridge, which links Prince Edward Island to New Brunswick, Canada, has a C$42.50 toll, so cost-conscious travelers clearly need to keep tolls in mind when traveling by car.
Furthermore, depending on the destination of travel, some areas charge people to travel through densely populated areas. The London congestion charge is £8, and applies to those traveling through congested zones.
The given justification for bridge and busy road fees is that they require a higher level of maintenance which should be incurred by users. Unlike the reasons given for charging people to use the bathroom, this argument actually holds some water. (Find out how this infrastructure can help you earn money in Build Your Portfolio With Infrastructure Investments.)
After incurring several unforeseen fees to get to your final destination, entertainment can end up costing more than initially expected. Ticketmaster, for example, charges a convenience fee, order processing fee and a facility charge in addition to the actual value of the ticket. Depending on the show you want to see, a family of four can pay an additional 20% on top of the budgeted amount. (Learn more about the movie industry in The Economics Of Summer Blockbusters.)
The Bottom Line
Extra fees are becoming the norm for many industries. The main problem is that when one business adopts an additional fee structure, others will follow suit - a tactic at which the airlines have excelled. Eventually, spillover can occur to other type of businesses, as with the expected trend in hotels, which are following the airlines' lead.
Unfortunately, when businesses start relying on extra service revenues, they will often become dependent on them. Many airlines introduced a fuel surcharge when oil was trading at $140 a barrel, claiming that they needed the extra revenue to cover the growing expense. But when oil plummeted following the global meltdown in 2008-2009, these charges were not removed.
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