The Largest Hotel In New York City Adds Deceptive and Misleading Resort Fees + Scams New Yorkers

The Hilton Midtown, the largest hotel in New York City at 1,979 rooms, has decided to start adding deceptive and misleading hotel resort fees in November 2017. They are calling their resort fee an "urban destination charge." This means that instead of listing one hotel room rate as the hotel had always done before November 22, 2017, the hotel rate now has two parts. Since the hotel room is now split into two, that means that one part of the room rate is advertised and the other part of the room rate is hidden as an "urban destination charge." 

The hotel resort fee has long been a controversial charge by hotels. Hotel resort fees are currently under investigation by 47 Attorneys General. The Attorney General of DC subpoenaed Marriott Hotels on June 6, 2017 over this investigation due to their refusal to hand over documents to the investigation. Resort fees have been determined by the Federal Trade Commission to be detrimental to consumers. Still, these hotel fees allow hotels to lie about their advertised price. The fee breaks a hotels room rate into two parts and only one part is advertised. Hotels like to look like they are cheaper than they actually are, so the number of hotels charging hotel resort fees in New York City has more than tripled since May 2016. 

Hotel resort fees are not just an issue for tourists to be concerned about in New York City. These hotel fees have massive tax implications for New York City. In New York City many hotels have ignored a city tax directive to tax hotel resort fees as a second room rate at full hotel occupancy tax of 14.75%. Most hotels in New York City are only taxing their hotel resort fees at the lower sales tax rate of 8.875%. This causes a 5.875% tax loss from each resort fee per room per night. 

For more detail, the Hotel Occupancy Tax in New York City is 14.75%. NYC sales tax is much lower at 8.875%. Until November 2017, the entire room rate at the Hilton Midtown was taxed 14.75%. After November 2017, the hotel is splitting their price in two. If they chose to go the way of most hotels in New York City, the first part would be taxed 14.75%, the second part (the "urban destination charge") would only be taxed 8.875%. So if the advertised rate is $200 and the urban destination charge is $25 the total price of a room is $225. New York City prior to November 2017 was collecting $33.18 in taxes on a $225 room at the Hilton Midtown. Now with their "urban destination charge" the city is only collecting $28.17 ($200 x .1475 = $29.5) + ($25 x .08875 = $2.22) and 29.5 + 2.22 = $31.72. So the city loses $1.47 in taxes per room per night on a $200 room. That would be a lot of tax loss for the largest hotel in New York City with 1,979 rooms. 

You can calculate this out by seeing what the resort fee would have been at hotel occupancy tax and seeing what would be now if they go the way of most hotels in New York City and charge the lower NYC sales tax. The resort fee at the Hilton Midtown is $25 so previously the city would get $3.69 from that (25 x .1475) when the fee was part of the room rate as it was previous to November 2017. With a resort fee the City gets less (25 x .08875), $2.22. That's a 1.47 loss per room per night. At full occupancy, that is a $2,909.13 tax loss to the City per day. That's a $1,061,832.45 tax loss to the city per year. It is sad to see the Hilton Midtown engage in a policy that leads to such a massive tax loss across New York City. Tax revenue is essential to keep the city going. Hilton policies like resort fees could lead to over a million dollars lost that could have funded the subway, affordable housing, public safety and a million other great things that protect and make New York great. 

Not only do hotel resort fees cheat New Yorkers and the tourists who stay at the hotels, they cheat the people who work in the hotels as well. When tourists are charged bogus hotel resort fees like this urban destination charge, the tourists in the hotel are less likely to leave tips for the house keeper. They think these fees cover housekeeping tips. These fees have absolutely nothing to do with housekeeping or any service in the hotel. These fees are simply part of the room rate split off so that the Hilton Midtown can lie about their advertised price to lure in customers, potentially cheat New York City of over a million dollars of tax revenue per year and even hurt their own house keepers who will be less likely to see tips after the implementation of this fee. 

When people think hotel resort fees are just a tourist issue, just think about how this one hotel could cause New York City to lose over a million dollars a year in tax revenue. 

This is a lovely photo of New York City's biggest hotel, the Hilton Midtown. Photo credit: Hilton Hotels

This is a lovely photo of New York City's biggest hotel, the Hilton Midtown. Photo credit: Hilton Hotels