Virgin Hotel Chicago: Guests to pay no extra fees at new US hotel

A new hotel company plans to buck the trend when it opens its first property, in Chicago, in January by not charging travellers those annoying extra fees, while allowing reservation cancellations till late on the day a guest is scheduled to arrive.

Set to open in mid-January, the Virgin Hotel Chicago will not impose fees on various things that other hotels routinely charge for, including high-speed Wi-Fi and business centre services. And travellers will be able to cancel a reservation as late as midnight on the day of arrival without being charged.

"We really tried to home in on the pain points that customers complain about," said Laura Kilroy, a spokeswoman for Virgin Hotels, which also plans to open a hotel in Nashville, Tennessee, in 2016 and in New York in 2017, and has said that London is among the other cities it is considering in an eventual introduction of 25 hotels with the same policies within the decide.

Virgin's no-fees and liberal cancellation policies are in contrast to a trend among hotel companies, which have been increasing revenue by adding surcharges to the basic room rate for various services that will total a record $US2.25 billion ($2.61 billion) this year, according to a forecast by Bjorn Hanson of the New York University Tisch Centre for Hospitality and Tourism and Sports Management.

Two big international hotel companies, Marriott and Hilton, are also tightening policies starting in January to require at least a 24-hour notice to cancel a reservation without having to pay a penalty equal to the rate for one day. At many hotels, business travellers have long been accustomed to being able to cancel as late as 6 pm on the day of arrival without a penalty.

As we all know, airlines for years have been busily adding fees on top of basic fares for services including seat choice, preferred boarding-queue position and checked bags. And there was more bad news for fliers last week when JetBlue said it would start charging basic-fare passengers to check a bag. This will leave Southwest as the only major US domestic airline not charging for checked bags. JetBlue also said it would refit its cabins to add more seats.

In the hotel industry, which is experiencing record US occupancy rates this year, fees and surcharges are, oddly enough, most common at higher-priced hotels in the four-star and five-star niches, like big-city convention and luxury hotels, as well as resorts. In many of these hotels, it is not unusual for guests to be charged $14 for in-room Wi-Fi service, or various other fees for using the hotel business centre or room-service delivery. Conversely, most mid-level and economy hotels include Wi-Fi and other services in the basic room rate, and many even include free breakfast and free airport shuttle service.

The cancellation policy changes at Marriott and Hilton apply to all of their brands. Cancellation rules at those hotels and resorts that already have stricter policies - sometimes requiring three or more days' notice - will not be affected.

The changes will increase fee revenue. But several business travellers pointed out another reason for these changes. When planning a trip, many travellers book directly on the hotel's website to guarantee the room. But hotel room rates fluctuate so, closer to their departure date, they check third-party booking sites like Hotels.com, Orbitz or Expedia. If they find a better rate, they book that and cancel the initial reservation with the hotel, knowing there is no penalty.