Energy surcharges Consumers should be aware of the costs of creature comforts

Energy surcharges
Consumers should be aware of the costs of creature comforts

June 2, 2001

In states on both coasts, hotels have been adding an "energy surcharge" to customers’ bills to cover the rising price of electricity and natural gas. California hotels charge as much as $3.50 per night; one New York hotel adds $5.

The surcharge serves several purposes. It helps businesses pay their utility bills, which have skyrocketed in recent months. It also makes consumers aware of the need to conserve energy. For years, hotels have posted cards that asked guests to reuse their towels for an extra day and encouraged them to sleep on the same sheets for the duration of their stay. That was a polite way of reminding people that laundry services cost money. They could still toss their towels on the bathroom floor after one use if they wanted, but the subtle message of those polite placards was that such wastefulness was one reason hotel stays were expensive.

Now hotels have gone a step further in separating out the energy surcharge. They’re saying, in effect, "Don’t blame us; it’s the electric company’s fault." It’s a clever marketing tool because it redirects criticism about the high cost of a hotel room in New York or California. Travelers nod knowingly when a desk clerk mentions high utility bills and rolling blackouts. They understand that sticker shock, because their own utility bills are high. They’ve been watching gasoline prices roll ever higher, and if they paid close attention to the price of their airline tickets, they’d realize that a surcharge has been tacked on there as well.

Marketing executives have long understood the psychological value of an itemized bill. "The middleman" is an aggregate of processors responsible for the fact that bread costs $2 a loaf when wheat is trading for $2 a bushel. Rural Coloradoans are familiar with the "shipping cost" explanation for prices that are considerably higher here than on the Front Range, and we’ve all been told that the price of gasoline is higher here than in Farmington because of state taxes. Newspaper publishers consider dividing out a "postage surcharge" every time the Postal Service raises rates, an unpleasant event scheduled to happen again in July.

The message is clear: "The buck doesn’t stop here." Instead, a hefty handful of change goes to pay bills over which managers have very little control.

A charge of $2 or even $5 may not cover a hotel’s increased energy costs. It makes those costs visible to consumers, though, and that’s an important way of encouraging them to control their energy usage. Sure, the hotel room costs the same amount whether a guest spends an hour in the hot shower or frugally lathers up with the water off, but the message is clear: hot water, air conditioning, ice and television viewing are not free.