Are You Covered?

No-Show Blues

You may already have unwittingly discovered the latest trend in the travel industry: penalty fees. Lately, a number of hotels have instituted early checkout charges for guests who cut their visits short. And some restaurants are testing fees for no-shows, too.

Why the onslaught of penalty fees? "When a room goes unused because someone decides to switch hotels or leave early, hotels lose money," explains Robert Nozar, editor of Hotel & Motel Management magazine.

Likewise, when tables sit empty because of no-shows, restaurants--particularly the pricier establishments--shoulder sizable revenue losses, says Wendy Webster of the National Restaurant Association.

Some businesses are choosing to recover a portion of their losses by levying penalty fees. For example, the Wyndham Anatole Hotel in Dallas recently instigated a $50 fee for guests checking out early. The Loews hotel chain is testing penalty fees for early checkout at three of its properties. And American Express just completed a six-month pilot program in which 30 restaurants were allowed to charge a no-show penalty for patrons using their American Express cards to hold reservations. (The fees, ranging from $10 to $25, were determined by restaurant owners.)

Despite their surge in popularity, though, some industry insiders insist penalty fees won't become commonplace. But in the end, there's only one sure way to avoid the fines: Travel responsibly.

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This article was originally published in the October 1996 print edition of Entrepreneur with the headline: Are You Covered?.

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