Some London Hotels Apply Discretionary 5% Accommodation Service Charge

A frustrating tactic employed by an increasing number of hotels in London is making headlines. Multiple properties in the English capital are reportedly including a "discretionary service charge", typically 5%, on accommodation bills – without informing customers, ostensibly for distribution among employees. This charge is added automatically but can be removed or refunded if a guest requests its removal.

Travellers reviewing their bills should compare the nightly accommodation amount against their reservation confirmation, as these charges may not be clearly labelled as a separate “service charge” and can be integrated into the overall accommodation cost. Guests can request the charge to be removed or refunded even after payment. This is worth considering, especially if staff in bars, restaurants, or room service have already been tipped separately.

This practice is also observed at several other London hotels. Five Hyatt properties – Andaz London Liverpool Street, Hyatt Regency London The Churchill, Great Scotland Yard, Hyatt Regency London Blackfriars, and Hyatt Regency London Albert Embankment – disclose a 5% accommodation service charge. The Savoy and The Landmark London also disclose a discretionary 5% charge on accommodation, with The Landmark additionally applying 12.5% to food and drink bills. The BoTree and The Newman list a 5% room charge and a separate 13.5% charge for food and beverage, with The Newman explicitly stating that guests can amend or remove discretionary charges. The Stratford lists a 4% discretionary charge on accommodation bookings.

Reports indicate that this type of charge has been appearing more frequently since at least January 2022, when Hyatt confirmed its introduction at some of its London properties, citing staffing shortages. As of 1 October 2024, British law mandates that qualifying tips and service charges must be passed fairly to workers, without employer deductions, and do not count towards the minimum wage. Additionally, Britain’s tax authority treats genuinely optional service charges as outside the scope of Value Added Tax (VAT), which offers a tax advantage over a higher, taxable room rate.

Source: Viewfromthewing

Opinion

London hotels are increasingly employing a tactic that is both frustrating and disingenuous. By automatically adding a 'discretionary' service charge to the room rate, they inflate the final price without transparently declaring it upfront. While these charges are technically refundable upon request, the onus is placed squarely on the guest to scrutinise their bill and navigate an awkward conversation – which many will simply avoid.

This opaque practice allows hotels to effectively charge more while advertising lower base rates, benefiting from tax advantages and potentially subsidising wages under the guise of an optional contribution. It represents a clear dilution of the advertised price, and a concerning trend for travellers.