More Fees WithTravelingContinuing toTrend in 2013Luke Hunterand Lindsey GillanHT-3444/22/13
More Fees With Traveling in 20131More Fees Will Continue to Appear Across the Border in the Traveling IndustryWithin the upcoming years, travelers can count on spending more money if they want abetter experience. The flying fees have been around for many years and continue to grow inallsectors of the industry to generate more money. There are some people that are willing to payless for something more basic, rather than having extraamenities.Some airports have been knownto have more fees in recent years, for example baggage fees, aisle seating, early departure feescancellation fees,Wi-Fi fees.When figuring out what the baggage fees come down to, hotels cantypically charge you two dollars per bag or more to bring your bag wherever you want, withoutthe tip included.Thereis an Irish airline is planning to install vertical seating for passengers who arewilling to stand for a discount.They are also considering putting pay toilets on their planes. Thatwould give a whole new meaning to the term ―holding pattern. (1)‖ There is also an airline thatsets either a minimum bid, or a bidding range. You put in your offer, wait a couple of days, andif yours was the winning bid, the airline notifies you to complete the transaction (2).Back in the day, there used to be more services for companies that were expected for thepeople, for example when pumping gas, there would always be someone who would be pumpinggas. According to skift.com, today ―U.S. hotels began charging fees in the late 1990s, wellbefore U.S. airlines, but the record $1.95 billion that hotels were estimated to have charged infees in 2012 pales in comparison to the $12.4 billion that U.S. airlines were forecast tohavelevied last year.(3)‖Adding the extra costs of traveling is a positive for companies to bundle packagestogether. Many companies find very profitable by making a bundle deal for the customers sothat they think they are getting a better deal.Some airlines are starting to offer passengers a trade-off deal. (4) Air Canada and Delta have already started recommending people to try out theirnew trade-off,which offers passengers reduced air fares if they use their frequent flyer milesoften. With this there has also been a push in 2013 for outside companies to give guests anoption of receiving hotel reservations and ground transfers during the booking process, instead ofhaving the passengers complete their flight reservation. (4)
More Fees With Traveling in 20132Adapting Business with the Trend of Rising Fees―A new study estimates that airlines around the globe will charge $36.1 billion in fees forthings like checked luggage, seat reservations, and in-flight meals this year. That’s an all-timehigh, and an 11% increase over the 2011 total‖ (7), so how are business marketing theircompany so people are willing to keep paying more fees each year.Michael O’Leary the CEO of cheapo European carrier Ryanair is well known for doingand saying outrageous things such as the possibility of putting pay toilets on planes and evenhaving inflight porn to help make money for the airline. ―Trend is the long-term, underlyingpattern of growth or decline in sales resulting from basic changes in population, capitalformation and technology‖ (Marketing for Hospitality and Tourism) Ryanair is taking intoconsideration all of these concepts for their flights. The culture of population is always changingand since people are willing to pay less to receive only and just only what they need, O’Learyproposes ideas that will give people this. If Ryanair flights offer flights that are very cheap butpeople only stand on them and have to pay to use the toilet, they have to make sure they marketto the population that is willing to do this for the cheap price of the flight. This would have to bemarketed to people who want to get to point A to point B and do not want or expect anythingelse, but would be willing to pay more if they end up needing to use the bathroom.Airline marketers are trying to get rid of the airline bathrooms, leaving one for the use ofthe travelers who are willing to pay that extra fee to use it and in general it would make moreroom for more seats in the plane to seat more people.―Part of his justification for the idea is thatsix extra seats could translate to a 5% savings for passengers, which is actually less compellinggiven how extremely cheap the tickets are on Ryanair, Europe’s largest airline. Your averageflight goes for £40, about $63, making the bathroom sacrifice worth about £2, or $3.15 perperson.(5)‖An example of an airline that is not adjusting to the trend of more fees is Virgin America.Virgin America ―The San Francisco–based carrier is regularly voted to the top of ―best airline‖lists. But it is far from the best in the business at making money (8).‖ So what is it that VirginAmerica is doing wrong? It may be because it offers first class, premium economy and economyflights; it does not offer low-cost carriers that fly with single-class seats and services. ―VirginAmerican stands out especially because the industry is dominated with trends pushing for morefees, fewer perks and an overall degrading and deglamorizing of the flying experience (9)‖,Virgin America is not taking advantage of customers wanting to pay less and receive less,however Ryanair has the right idea. Virgin America could market more to the wealthy that arewilling to pay more for flights and receive full treatment but maybe there are just not enoughpeople willing to do this for the business to stay profitable.―Years ago it was laughable to compare buses with planes. But nowadays, the concept ofa plane being little more than a ―bus in the sky‖ is the industry standard (10).‖ The VirginAirlines has been able to generate a reaction for the guests that can keep them coming back, but
More Fees With Traveling in 20133with their high prices and airline fees that are mandatory, those fees may steer future customersaway from their airline.That is why culture largely impacts trends and it influences how long ittakes for them to become a reality.―Last summer, travelers griped about the onslaught of airlinesfees—for early boarding, seat assignments, checked and carry-on baggage, and on and on—thatcould easily wind up adding 50% to the price of a flight(6)‖ Those fees associated with travelinghave been around for a long time because the culture is changing so rapidly compared to how itused to,and technology advancements are helping this trend move at rapid rates. What the end ofthis trend would be is people paying bare minimum and receiving only what they paid for. IfRyanair began to have flight where your ticket only pays for you to get from one place to thenext and fees would be added for any additions this would be the end point of the trend becauseit would not be able to go any farther.In a marketers point of view, they would be saving moneybecause only the people that really need to use the restrooms, or extra amenities would pay extra,helping the planes profit rise because then they wouldn’t lose any unnecessary utilities orequipment charges.Marketing Strategies Remain Key to Profiting Form Additional FeesHotels may not be quite as extreme as airlines with this trend yet but they are on theirway. ―There’s a reason hotels are becoming more aggressive about fees. ―They’re highlyprofitable,‖ says Bjorn Hanson, an NYU professor who studies hotel fees. Of the nearly $2billion the industry collected last year, between 80 percent and 90 percent was profit‖ (11), ifthis trend continues it could someday get to the point where you pay for just a bed and anyadditional amenities will add fees to your stay. Fees have a very large impact on how a businessis marketed. How a hotel markets its rooms will vary with the amount of fees.When Inns began appearing in America the service was much different from what it isnow. Hotels began to realize that there was a customer base that wanted to payless and receivejust a room. Motels are a great example of a product providing just what the customer wants, aroom to sleep in on the side of the road and nothing else. Fees in the traveling industry havealways been impacting businesses marketing but in 2013 it will be taken to a whole new level. Inthe USA Today article ―5 Trends to look for in Travel This Year‖ it describes that ―Paying for atrip will look less like a prix fixe menu and more á la carte this year.‖ This trend is impact muchmore than just airlines and hotels it is also prevalent in rental car agencies and cruises. ―Rentalcar companies have become expert at charging for extras. ―The base price for a rental car mightlook attractive, but you can easily doubles that with a GPS locator and infant car seat‖(usatoday.com). Carnival Cruise Lines is also trying out a program named ―Faster to the Fun‖―…for $49.95. It includes early embarkation and priority dinner seating. On many ships, you canpay $30 or $40 more a person to dine at a higher-end restaurant rather than the venue included inthe fare.‖
More Fees With Traveling in 20134When Matt Anderson, the General Manager at the Van Dusen Mansion and theRivertown Inn and the Director of Business Development at Mintahoe Catering, was asked if hehas incorporated any marketing strategies to adapt to rising travel fees? He replied with ―Yes,We have made more cost effective incentives that the consumer feels like they are getting morefor their money‖ he also mentioned that ―Service charges have raised from around 12% in 1992to 20% in 2012.‖ Anderson a clear veteran of the hotel industry also described some of thepositives of more fees in a hotel ―Staff can gain a portion of these fees as tip. The reminder ofthe service fee goes directly to the company’s bottom line which helps operating expenses.‖Anderson gave some examples of fees he has seen hotels add well he worked there―Some hotels Food and Beverage departments will charge for staff, they call this a house fee.There are services charges, maintenance fees, and also a gratuity can be added at proprietordiscretions.‖ Even though the trend of how hotels market their rooms cheap but have many feesmay be the trend Anderson does not believe it’s the best way to do it ―While it might help somesmall businesses to recover some incomes in this rescission. It can hut the bigger properties withguest retention.‖ When we asked Anderson if there any fees that he thinks are necessary? Suchas Wi-Fi fees? Or Cancellation fees? He stated ―Wi-Fi no. Cancellation yes. You always need tobe able to support any cancellation with some kind of recovery income. These different fees wesee in other states are directly affected by government and state taxes.‖Anderson does not believe that hotels would ever become as extreme as flights, such asthe ones that O’Leary suggest. Anderson says that ―The market is too big and there is too muchcompetition for room nights. With the new whys to book on line with booking.com, Expedia andothers there is no why the consumer will book that particular hotel when there are so many otherchoices.‖ Anderson also added that ―Another fee we have seen recently is sir charge‖ finally hestated that ―I don’t think the marketing strategies have changed but you do see these fees postedin some of their collateral.‖―Blaise Waguespack, an aviation marketing professor at Embry-Riddle AeronauticalUniversity, wonders how many more fees airlines can find. ―The big issue is, how many morefees can you create?" he says‖ (usatoday.com), finding new fees may be what companies have todo to stay ahead of competitors. In the case study mentioned earlier in this paper where O’Learythe CEO of Ryanair mentions the new types of fees he is considering adding is a great exampleof what might be needed to be done to stay ahead of competitors. If people want to spend as littleas possible businesses need to realize this and market to them.The case study from section two about Virgin America shows how a business is notadapting trending fees or they might just be marketing themselves wrong. If Virgin Americamarketed its flights to a wealthier customer base that are willing to pay for flights that have greatcustomer service, it may raise its sales. Or Virgin America could follow the lead of other airlinesand start offering flights that offer bare minimum for cheap prices and tack on fees to the peoplewho want more.
More Fees With Traveling in 20135One reason why this trend has become so dominate in recently is because of how much itcan help out companies still recovering from the recession ―As a result of these trends, theindustry in general has become profitable again after years of red ink. And having fewer flightshas resulted in a drop in flight delays and cancellations‖ (weather.com). 9/11 also had a hugeimpact on the travel industry, so the addition of more fees has helped some businesses make upfor lost business.
More Fees With Traveling in 20136References1.) "Air Travel: Fees, Fees and More Fees." ARBcpa RSS. N.p., n.d. Web. 21 Apr. 2013.2.) "4 New Ways Travelers Are Being Tempted Into Spending More." Business Money 4 NewWays Travelers Are Being Tempted Into Spending More Comments. N.p., n.d. Web. 21Apr. 20133.) . "Skift." Skift. N.p., n.d. Web. 21 Apr. 2013.4.) "The New Airline Fees Travelers Need to Know about for 2013." NBC News. N.p., n.d.Web. 21 Apr. 2013.5.) "Hold It: Airline Might Ditch Toilets to Make Room for More Seats." NewsFeed Hold ItAirline Might Ditch Toilets to Make Room for More Seats Comments. N.p., n.d. Web. 21Apr. 2013.6.) "Airlines’ Same Old Story: More Fees, Higher Fares, Fewer Perks, TougherRestrictions."Business Money Airlines Same Old Story More Fees Higher Fares FewerPerks Tougher Restrictions Comments. N.p., n.d. Web. 21 Apr. 2013.7.) "Business & Money." TIME.com. N.p., n.d. Web. 21 Apr. 2013.8.) http://business.time.com/).9.) "Business & Money." TIME.com. N.p., n.d. Web. 21 Apr. 2013.10.) "Business & Money." TIME.com. N.p., n.d. Web. 21 Apr. 2013.11.) "Five Days of Fear: What Happened in Boston." Dallas-Fort Worth News, Sports,Entertainment, Weather and Traffic. N.p., n.d. Web. 21 Apr. 2013.12.) Matt Anderson Bio:Matt Anderson the General Manager at The Van Dusen Mansion and Event Center isresponsible to overseeing daily operations for a staff of four employees on property aswell as all aspects of communication with our exclusive catering company MintahoeCatering and Events to provide seamless service to our guests. Manage all projectsrelated to external vendors in the continuing improvement process of the mansion.He has also been the Director of Sales at the Stone Ridge Golf Club where he had fullresponsibility for Food and Beverage Operations including development of menus,marketing and liquor inventory. Responsible for soliciting, booking and detailingmeetings and events as well as overseeing and scheduling the catering and conferenceservice staff and the staff in the food and beverage outlets.He has also increasedfuture year catering bookings by 40% for 2009 and 2010 over prior years.