The Thompson Hotel Denver is a recent-build property owned by T2 Hospitality. Like many lifestyle hotels, they don’t just rely on room revenue to earn a profit. They lean heavily into food and beverage. And this hotel has a unique strategy for bumping up their revenue – by 3%.
As this charge slip from the hotel’s bar shows, they add an automatic 20% surcharge and pocket 3% of it for themselves. You’re not just required to tip the servers, you’re also required to tip the owners.
Growing up, 15% on the pre-tax total of a meal was a normal tip. Somehow that’s become 20% on the after-tax total. At this property, however, they’re adding 20%, but if you want to tip 20% you need to add an additional gratuity.
- They say they are doing it, so it’s not ‘fraud against the workers’ and actionable under law
- However it’s fraud against the consumers, because the menu prices aren’t the actual prices. Everything on the menu is 3% more than what’s actually listed.
During the pandemic, the Motif Hotel in Seattle (then a Hyatt, now Hilton) asked guests for donations. This wasn’t extra cash for a small business. It was extra cash for a Hong Kong-based investment group. But at least that was voluntary.
San Francisco’s Marriott Marquis was just dinged for pocketing $9 million in service charges that presented as benefiting workers. Two Hyatts in Los Angeles, including a Thompson property, are being investigated for adding service fees for restaurant workers and then pocketing the money. In those cases it appears the money is going to workers. Here the hotel has the audacity to say that it’s not – which is better legally but worse ethically.
A reader reports that the General Manager of the Thompson Hotel Denver defends the practice two ways,
- The hotel’s rising costs with no explanation for why this needs to be addressed by a percentage add-on fee, versus adjusting menu prices. Why do higher costs force a surreptitious response?
- A need to help employees with no explanation for how a mandatory 3% tip for ownership benefits employees in any way.
President Biden has come out against scammy mandatory fees. He’s not actually doing anything about them, preferring to simply campaign against them. And so the practice continues.