How 'hidden costs' can dent the image

Recently, a lawsuit was filed against Hilton Hotels in USA for 'hiding' the actual price of their hotel rooms and charging 'hidden resort fees'. The lawsuit alleged the hotel brand listed its rooms at enticingly low rates and then charged hidden fees of anywhere between $15 to $45 per night as mandatory charges or resort fees. Closer home, a right-to-information (RTI) was recently filed by the Hyderabad-based Forum Against Corruption against BookMyShow and PVR for levying several ambiguous charges such as internet handling fees, convenience fees, etc. while making online bookings. The RTI resulted in the Reserve Bank of India (RBI) taking cognisance and authorising the said brands to stop levying such fees.

The practice of 'drip pricing', wherein brands advertise a base 'headline price' to attract gullible customers to make a purchase and then start adding in additional costs and charges, is rampant across brands in the hospitality, travel, and e-commerce segments.

Airlines, especially the low-cost brands like AirAsia, Ryanair, JetBlue, are known to make money through multiple hidden charges such as checked baggage fees, flight cancellation charges, charges for free WI-FI in-flight, costs for a name change in online booking, and blanket and pillow fees! As per data, travellers in the US alone paid $7.1 billion as fees for checked-in baggage and flight changes in 2016. Brands like Ryanair charge £115 to change a name in online booking, while those like American Airlines charge from $200-$700 for making flight changes.

Experts say e-commerce firms, travel booking sites, and food delivery firms, especially, are also known to levy hidden charges like convenience charges, restaurant charges, etc., all of which inflate the final amount that the consumer pays.

"The tactic is simple. It is aimed to mask the real price by projecting a brand as being 'affordable', one that is providing discounts. Brands lure consumers by marketing attractive prices which seem too good to be true. Once a consumer falls for it, selects what he wants and clicks on the final booking, the price suddenly appears to be highly inflated. But only due to the convenience factor attached to online bookings, consumers often end up making such buys," say experts.

Bejon Misra, the founder of Consumer Online Foundation, says there is absolutely no regulation when it comes to such arbitrary charges, especially by travel and e-commerce sites and airlines.

According to a brand expert Harish Bijoor from Harish Bijoor Consultants, which specialises in brand and business strategy, there is a certain degree of opacity that exists when it comes to the end consumer price. "Brands need to be transparent in their pricing structures and also with their discounts."

Experts feel transparency in pricing should be of topmost importance for brands at a time when competition in every sector is at its peak and brand equity reigns supreme. ''Today, protecting the brand image and enhancing equity is a key priority for all brands. At such a time, no brand can risk an image owing, especially, to factors such as hidden costs, drip pricing and other unexplained charges which can damage their relationship with their customers. Therefore, it is advisable for brands to make their costing structures wholly transparent and be upfront when it comes to the costs. Let the consumer know what he has to pay right at the beginning and then decide whether to proceed ahead or not, instead of getting attracted by low prices and then feeling cheated with an inflated final price,'' feel experts.

According to Amit Damani, co-founder of Vista Rooms, a luxury homestay brand, it is imperative for brands to keep their pricing fair. "We do take responsibility for the entire experience of our guests and do the best that we can to ensure their complete satisfaction."

Experts advise consumers to proactively compare prices between various brands and platforms before making a buying decision. Says Damani, "Information access today is easier than it has ever been. Customers should be prudent and compare pricing across various platforms before buying any product or service."

Adds Misra, "As of now, consumers have the right to choose and they should make full use of this by cross-checking and comparing. As long as there is no cartelisation, consumers retain an upper