When the clientele seems to have become more monolithic, less diverse, we can understand that some companies—and producers in general, to use the economic jargon—would mimic the hierographical hang-ups of their customers. Sometimes, it verges on the pathetic, as we can see in yesterday’s Wall Street Journal (“The Hidden Ways Companies Raise Prices,” February 12, 2022), but competition can still limit the damage:
Some of Marriott International Inc.’s Autograph Collection hotels had been charging a “sustainability fee” of about $5 a night. The company that manages the properties, Innkeeper Hospitality Services LLC, says it covered things like more-efficient HVAC systems.
They stopped charging the fee several weeks ago, “because we understand that while we believe in environmentally responsible stewardship, not everyone cares about our planet’s health,” IHS CEO Amrit Gill said. He said Marriott had asked the company to stop charging the fee. Marriott declined to comment.
Marriott International has presumably realized that some customers are not willing to pay any price to save their, or others’, environmental souls.
READER COMMENTS
John hare
Feb 13 2022 at 1:15pm
Customers do tend to dislike bogus fees. Sustainable/efficiency is in the company interest Give me the straight price up front for repeat business. I prefer $100.00 plus tax as opposed to $75.00 plus booking fees plus parking permit plus other crap even if the total is the same.
Pierre Lemieux
Feb 13 2022 at 7:00pm
John: Interesting, but that is your own preference and probably only in certain cases. Many consumers, those who don’t want popcorn, prefer a special charge for popcorn in theaters instead of a higher ticket price. David Seltzer (see below) prefers a distinct charge for heated seats. Only free markets can make the correct and diverse arbitrage.
Rebes
Feb 14 2022 at 1:39am
John’s example was unfortunate in that included items from which the consumer can typically opt out (parking permit) and items for which the consumer has no choice (booking fees). The latter category is bogus. When one buys a ticket to a performance these days, the advertised price gets increased by service fees, handling fees, facility fees and who knows what. I can’t opt out. That’s not free market, it’s false advertising.
john hare
Feb 14 2022 at 4:17am
Yes that is more accurate about my meaning. “Services” that are necessarily part of the package but with separate billing to make the price seem lower. Parking, popcorn, and heated seats are in a different category as others point out.
Ebay has been good for me, but I am quite careful about reading the shipping fees as some items almost double in price if one is careless.
Pierre Lemieux
Feb 14 2022 at 2:54pm
But does it matter anyway whether a price is quoted as one number A or a series A1, A2, and A3, where A1+A2+A3=A? Suppose a TV set (of a given configuration) sells on the market for $500. Why would it matter if the supplier prices it at $350 for the electronics plus a power-supply fee of $50 and an assembly fee of $100, even if the customer cannot opt out of the added fees? The only reason, it seems, is that the second pricing method makes it more costly in time for customers to compare prices, which is why goods that consumers only value as a package are usually sold with the second pricing method. But only the market–that is, buyers and sellers–can determine which are these goods and which are not. This is some goods come with a very basic warranties and supplementary warranties for a price, while others have an extensive basic warranty with no possible extensions, and many other combinations. (And note that ordinary consumers are not stupid.)
Craig
Feb 14 2022 at 4:29pm
“But does it matter anyway whether a price is quoted as one number A or a series A1, A2, and A3, where A1+A2+A3=A?”
No because A = A and so we can bottom line the price.
If I stayed in a hotel 10 times last year and you told me its $69.99 per night. 0 out of 10 times would I be able to bottom line the price.
They’re playing smoke and mirrors with the pricing because they don’t want to compete on price and they want to advertise a lower price and then they hit you with fees that they don’t even tell you about.
Matthias
Feb 20 2022 at 12:18am
As a customer it matters to me and I prefer the simpler prices, and will prefer merchants with simpler pricing, even if they are marginally more expensive.
Craig
Feb 13 2022 at 2:45pm
Hidden fees as the WSJ article notes is definitely their game. They want to advertise a lower price online and charge a higher price when you’re checking out. Sometimes you don’t even look. One of their better scams is to charge for parking. This might make sense in certain locations like Manhattan, but Orlando? I actually get Marriot Points, my favorite is the $20 they charge when I use the point for a free night for ‘incidentals’
Pierre Lemieux
Feb 13 2022 at 7:03pm
Craig: But then, most convenience stores do sell ice instead of water plus a freezing fee. Why? (Hint: See my response to John Hare.)
Craig
Feb 14 2022 at 11:26am
Not sure where you are headed on that one. You go to a C store, you pick up the bag of ice, you go to the register and really at the end of the day they can itemize it any way they want, but they tell you a total and you pay it.
Do you ever then look at your credit card statement and find a ‘plastic bag recycling fee’ for $.25 just added on? No….
That’s what hotels are doing though. You make the reservation, you check in, you hand them your credit card. You check out, now for sure you can sit there and check out formally and get the invoice. But a lot of people just walk out the door nowThey’. And then they’re just whacking you for $5 on the premise you’re probably not going to fight them over it and the name ‘sustainability fee’ is just a name that they think will make you even less likely to fight over it.
They’re just slipping something past the goalie here because you check out, you’re on I-75 and by the time you realize, and I might add IF you realize, they whacked you for $5, you’re home already.
Pierre Lemieux
Feb 14 2022 at 3:10pm
Craig: See my answer to John and Rebes above. Consumers are not stupid–except when intelligence efforts costs too much.
Of course, at some point, multiple fees can be misleading if not fraudulent. It can be the same on the consumer side too: one rents a hotel room to hold a party, for example, and leave the place in a mess (but just not enough of a mess to trigger a cleaning fee!). There are many diverse ways the market can handle all that. In Virginia, I went to a Hilton property where, on the check-out counter, there was a notice saying something like “If you are not completely satisfied, you are not expected to pay.” There was, as it were, a price of $0 per night plus a satisfaction fee of $200. Then, the not-too-moral consumer gets in his car, drives away, and realizes he was hit with a fee of $200!
BC
Feb 13 2022 at 3:41pm
I wonder when companies will start charging a “Diversity Fee” to cover the cost of fostering a diverse and inclusive workforce or an “Equity Fee” to pay higher wages for their lowest wage workers. Maybe the latter is how companies can respond to minimum wage hikes. Many restaurants do charge separately listed Covid fees to “show their appreciation for workers dealing with the pandemic”.
If government demonstrates how much it “cares about our planet’s health” by spending Other People’s Money, then I guess it only makes sense for private corporations to similarly demonstrate their caring by charging Other People more money.
David Seltzer
Feb 13 2022 at 5:37pm
Auto companies want to charge monthly fees for add-ons like heated seats. I live in Georgia and have no reason to have heated seats. When temps dip, I wear fleece lined pants. LL Bean is the better trade.
Gene
Feb 13 2022 at 7:50pm
“not everyone cares about our planet’s health”
Interesting how “Some customers [object to/don’t wish to pay/are unwilling to pay] the sustainability fee” (the proper form of a public comment by a top corporate officer) is pushed aside in favor of a gratuitous blanket insult to customers that Mr. Gill doesn’t know.
At least now we know the kind of people we’re dealing with here. I wonder if Marriott does?
Daniel Kian Mc Kiernan
Feb 13 2022 at 8:24pm
The real issue is of whether the fee and what it ostensibly buys can be waived in making the principal purchase. If they cannot, then the fee should be included in the advertised price.
Some customers may still be annoyed if given a break-down of a price, as when learning that some share goes to a cause that they dislike, or that a large share goes to something about which they are indifferent.
A great deal that is advertised as promoting sustainability does not. I think that, were I a lawyer, I’d make a hobby of suing the perpetrators in cases in which customers were distinctly charged for illusory sustainability.
Bill
Feb 14 2022 at 9:39pm
“The combination of deep feeling and complexity breeds buzzwords and sustainability has certainly become a buzzword.” Robert Solow, 1991
http://www.owlnet.rice.edu/~econ480/notes/sustainability.pdf
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