Top 7 Reasons Why Hotels Are So Expensive

Planning a getaway is always exciting. However, what holds people back from having a relaxing vacation is the excessive rates some hotels charge to their guests. While there are cheaper alternatives, the quality is definitely not as good as what high-end hotels have to offer.

Here are some reasons why hotels are so expensive:

  1. The hospitality industry is in the recovery stage.
  2. Tourists tend to focus on specific locations.
  3. There is an increase in the number of domestic tourists.
  4. Hotels are improving their amenities.
  5. Hotels are expensive during peak season.
  6. Owners have to pay taxes and fees.
  7. Hotel labor costs.

This article identifies and examines important reasons why travelers pay more for hotels. It’s important to know how this business works to find the most cost-effective way of choosing your hotel.

Top 7 Reasons Why Hotels Are So Expensive

1. The Hospitality Industry Is in the Recovery Stage

The hotel occupancy rates in the US have been negatively affected by the global pandemic. As a result, some hotels raise their prices to recover their losses.

Covid 19 hit the hospitality industry hard, with many hotels, restaurants, and attractions worldwide shutting down. Hotels had to remain closed for months and possibly even years, with many accommodations still not expecting to reopen any time soon.

However, even with this price increase, many hotels are still in the recovery stage due to the pandemic.

The hospitality industry is slowly trying to recover the amount lost during the pandemic by hiking prices even during the off-season. However, some hotel chains are still struggling with this difficult decision and the possible effects on the overall industry.

Since many people couldn’t travel during the first two years of the pandemic, they are now accepting the high hotel room prices because they are so desperate to get away for a few nights. If people don’t have a problem paying these high prices, the hotels will continue to keep them high.

2. Tourists Tend To Focus on Specific Locations

Location is another major factor to consider when booking a hotel. For example, a hotel room in New York City can be more expensive compared to other popular locations such as Los Angeles, Chicago, and San Francisco.

Travelers should always consider location when planning their vacation, as it can potentially impact their budget and overall experience. This could mean booking a hotel in a smaller city to get a cheaper deal.

However, you don’t want to book a hotel in a small city if you don’t think you’ll enjoy it as much. It makes a lot of sense to pay more for staying in a bigger city if that’s where you truly want to go. Just be prepared to spend extra money on a hotel!

If you choose to stay in a big expensive city, like New York, it might be a good idea to get a hotel a bit far away from the city center–as long as there are good transport links near the hotel. 

Some hotels may be slightly far away from where you want to visit, but if they’re right next to a subway station or bus stop, it might be worth booking it. This can end up saving you some money.

Tourists Tend To Focus on Specific Locations

3. There is an Increase in the Number of Domestic Tourists

From longer trips to larger getaways, many Americans choose to take more vacations at home or close to home. But with the rise in domestic tourism comes an increase in hotel prices.

This is a positive trend as more Americans stay at home to protect themselves from the Covid-19 pandemic.

Because of this, local hotels can expect to earn more than they normally would from local tourists who tend to travel elsewhere otherwise. As a result, hotel owners are making large fortunes since the demand for hotels is more than the supply.

However, I’m unsure if this trend will continue after the pandemic.

4. Hotels Are Improving Their Amenities

Hotels are also improving their amenities to attract more guests. For example, they are adding new features and services, such as free Wi-Fi, flat-screen TVs, refrigerators, air conditioning, and many more.

To enjoy these new features, you will have to pay an additional fee. But the convenience of having the air conditioning and a flat-screen TV is well worth the extra money.

Also, the hotel is making its rooms and services look much cleaner and newer than before.

You can find luxurious hotels with modern amenities and exceptional services. However, there are also some affordable ones that offer essential services. Therefore, you should always do your research to find the best deal for you. This will help you save money while still having a comfortable stay.

Hotels Are Improving Their Amenities

Food and Alcohol

There is an increase in food and alcohol options in hotels. For example, you can now find food courts, bars, and even buffets in some of the biggest and most luxurious hotels. This is another way for the hotel to get more money from you. They are charging an additional fee for the food and drinks and are making huge profits.

When you check-in, you will need to pay for everything, including the room, the food, and the drinks.

5. Hotels are Expensive During Peak Season

It isn’t easy to find a room at a reasonable price during the high season. Many hotels are completely booked, and they don’t have any rooms available. So this is the time when you need to be extra careful when planning your trip. You also need to book your hotel as far in advance as possible to avoid missing out on cheap rooms.

Many people have been victims of the high season scam and end up paying a lot of money for a room that is not worth the price. But once the peak season is over, the room prices are usually lower than average.

There are also specific days when hotel rooms are more expensive. For example, the New Year’s Eve is often an expensive night to book a hotel, particularly in big cities across the country. 

Ever wondered why hotels are so expensive during the high season? It’s because of the high demand and the hotels are using it as an opportunity to increase their profits.

6. Owners Have to Pay Taxes and Fees

Another great reason as to why hotels are so expensive is due to government taxes and fees. There are many taxes and fees imposed on hotels, and these can add up. They can be as much as 10%.

Hotels would be very cheap if it weren’t for all these taxes. Most of these taxes are imposed by the government, but some are imposed by other bodies related to the industry, such as the chamber of commerce. 

The taxes that the government imposes are passed on to the consumer in the form of higher prices, and this is why you see prices being quoted as “tax inclusive.”

Owners Have to Pay Taxes and Fees

7. Hotel Labor Costs

In the last few years, there has been a rise in labor shortages and an increase in labor costs. So, hotels need to make up for these extra costs by making reservations more expensive. Paying employee salaries is one of the biggest expenses a business has, especially a business like a hotel that has many employees to pay.

When you think about it, hotels have lots of different amenities that require plenty of staff. These include:

  • Reception desks: Of course, all hotels require reception staff, and paying these staff members is an expense for the hotel. Plus, many hotels operate a 24/7 reception desk nowadays, which means the hotel has to pay even more wages.
  • Swimming pools: Many hotels have swimming pools, and staff are needed to guard and manage these areas.
  • Restaurants and bars: Most hotels have restaurants and bars that are open from morning until late at night, and these services require plenty of kitchen staff and waiters.
  • Housekeeping: Every hotel needs housekeeping staff. Depending on the size of the hotel, some may need to hire a lot of housekeeping staff. This is a huge expense for a hotel.
  • Doormen and room attendants: Many 4 and 5-star hotels have door staff and attendants who help guests with their bags. As you can imagine, this is yet another expense for the hotel.
  • Maintenance services: All hotels need to have on-call maintenance repair people, like an electrician or a plumber, in case something goes wrong at any point. Electricians and other maintenance staff are expensive, which is another reason why it’s so expensive to book hotels.

As you can imagine, paying all these staff members requires a significant amount of money. Even for a big, busy business like a hotel, it can be challenging to navigate these expenses. The only way to make more of a profit is to increase room prices.

How To Save on Hotels on Your Next Vacation

Traveling is one of the greatest pleasures in life, but it can also be costly. So when you are on vacation, you want to make the most of it, meaning you want to stay at the best hotels possible.

It would be best if you were careful when choosing a hotel. You don’t want to pick the first high-end hotel that you see and end up spending a lot of money on nothing.

How To Save on Hotels on Your Next Vacation

Below are some tips to follow to make the best out of your vacation expenses.

1. Travel During Off-Peak Seasons

The best time to travel is during the low season. This is when the prices are the lowest, and you will also get good deals. Many hotels tend to offer promotions or great discounts to encourage people to come and visit.

And many tourist attractions tend to be less busy during off-peak season, which is another great reason to travel during this time.

In addition, airfare prices are very expensive during peak season. For shorter distances, heavy traffic can also be a problem. That is why traveling during off-peak seasons is the best option for budget travelers.

2. Take Advantage of Points and Cash Rewards

If you don’t like to plan far in advance, you should take advantage of travel rewards programs. Many larger travel companies offer rewards programs that allow you to earn points for purchasing their products. 

You can redeem these points for several rewards, including flights, hotels, and even merchandise. You can save a lot of money by taking advantage of these programs, and it is also a great way to save time by not having to plan far in advance.

3. Check Out Social Media for Deals and Promotions

Social media is a great way to find great deals and promotions before anyone else. To take advantage of these deals, be on social media before the announcement goes live.

The social media pages of the major travel companies are the best place to look, as they will often post deals and special promos several days in advance before they are available to the general public. This allows you to jump on your competition and get great deals.

4. Know About BRG

Many hotels are known to offer a “best rate guarantee.” This means that they will always try to give you the best possible rate that they can. They will often compete with each other to provide you with the best deal they can. As long as you are nice to them, they will always honor this guarantee.

5. Negotiate

It is to your advantage to negotiate the best possible rate for your hotel. The best thing you can do is be friendly to the hotel’s front desk staff you are staying at. They are the ones that are going to be making the decisions on whether or not you are going to be staying there. If you are friendly and polite, they will often be happy to give you a great deal.

6. Get a Hotel Credit Card

If you will be traveling a lot, it is worth getting a credit card with a travel rewards program. This allows you to earn points that you can later use to reimburse some of your hotel expenses. This also gives you a way to save money on hotels and helps you plan your trip more efficiently. 

If a hotel credit card is offered by a bank you are already familiar with, you should consider applying for it.