10% Hotel "Service Charge?"

[TooMuchToLearn]

I've been looking at some Thailand hotel listings online for the first time, and noticed listings for a Room Rate, 7% VAT, and a "10% Service Charge." Sometimes I have seen this "10% Service Charge" included in the quoted price, and sometimes it's been listed as "plus 7% VAT and 10% Service Charge."

So, what exactly is this "10% Service Charge?"

A friend who has lived in Thailand for a long time (and rented many a hotel room) has always believed this was a charge that was collected and paid out to the workers, to supplement their low wages. But frankly, this seems unlikely to me. To me, it reeks of a standard "hospitality tax"...like I've seen charged in many different cities...but with a clever name to make it feel less oppressive.

But the fact is, I am so poorly informed that I don't even know if this is a charge levied by the hotel...or levied by the government and merely collected by the hotel (like the VAT).

So, can anyone tell me what this "Service Charge" is for, and who the money goes to? It's kinda bugging me a little!

Thank you in advance!

TooMuchToLearn

[GrantSmith]

A friend who has lived in Thailand for a long time (and rented many a hotel room) has always believed this was a charge that was collected and paid out to the workers, to supplement their low wages. But frankly, this seems unlikely to me. To me, it reeks of a standard "hospitality tax"...like I've seen charged in many different cities...but with a clever name to make it feel less oppressive.

In theory the "service charge" is to be paid to the workers, many hotels that I'm familiar with here in Bangkok each do it differently but it's essentially the same.

Not the same as the 'hospitality tax' which is a government imposed sales tax. The 'service charge' is levied by the establishment and basically takes the place of a mandatory gratuity.

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[thepool]

Visit all the hotels and restaurants in your home town and ask the same question.

[larsjohnsson]

Every nice hotel have ++ 10&7%

[Misterwhisper]

Poster GrantSmith has basically already answered your question. I might just add the following:

Whenever you see a price in a hotel listed like, for example, Baht 150++, the first + stands for 10% service charge, and the second + for 7% VAT.

You may see this "service charge" as a sort of "obligatory tip" forced on you, the customer/guest.

This practice is by no means unique to Thailand. Many hospitality establishments around the world - especially in the higher categories - levy such a "service charge", although it is not always indicated separately but often factored into the final price of a room or service.

The idea is that this "service charge" is distributed among the employees to supplement their low base salaries. While high-end establishments generally claim to indeed pay out these funds to their staff, my hunch is that particularly lower-category places simply pocket it.

The "service charge" is not to be confused with "government tax" (or "hospitality tax"). I've come across price listings with +++, for example in Singapore, the third + indicating that government tax.

[madmitch]

Online, they mean absolutely nothing. It is the hotel or booking engine's way of making a price look cheaper than the actual price.

If you pay the bill at the hotel and these charges are included, in theory at least, it is a service charge that should go to the staff and a VAT charge.

[hanuman2543]

My GF is working at a nice boutique hotel in CM and they charge 10% service charge. At the end of the month it is divided between all people working there. Sometimes it nearly doubles her salary.

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[TooMuchToLearn]

Thank You to all those who answered (well, except "thepool"). I feel much better informed, now.

I guess I should be pleased--and impressed--that Thailand DOESN'T have a 10%-15%-20% "Hospitality Tax"...like I've seen in just about every place I've traveled, huh?

[dddave]

My home city of Boston charges 10% hotel tax, 7% meals tax (may be more now) and a 10% tax on rental cars. Basically, it's a way to sock taxes on to people who have no local vote.

[PattayaPhom]

Example, room inclusive THB 1,170 others will be room THB 1,000 plus 10% service and 7% tax....same outcome...its marketing, simples....so if you dont like the idea of paying the service charge just book through the offer of inclusive.

[chiang mai]

The Service Charge represents a substantial part of employee income in four star and higher hotels, my wife is paid at least 15k a month via this route, it can be a very useful motivator for staff.

[Crossy]

Try Malaysia where it's +++, service charge, luxury tax ,VAT

[GrantSmith]

Try Malaysia where it's +++, service charge, luxury tax ,VAT

Really? Last I time I was in KL (June 2013), it was the same as Thailand (1% less) i.e 10% Service Charge and 6% VAT

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[roamer]

Try Malaysia where it's +++, service charge, luxury tax ,VAT

Really? Last I time I was in KL (June 2013), it was the same as Thailand (1% less) i.e 10% Service Charge and 6% VAT

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Likewise.

[wooloomooloo]

10% service and 7% VAT is standard on all the bookings I've made on Agoda and other sites over at least the last six years.

Book a room on arrival if it's such a big deal.

[taotoo]

Example, room inclusive THB 1,170 others will be room THB 1,000 plus 10% service and 7% tax....same outcome...its marketing, simples....so if you dont like the idea of paying the service charge just book through the offer of inclusive.

I think it's slightly worse than that:

1,000 * 110% = 1,100

1,100 * 107% = 1,177

And can get significantly worse should they creatively add on a 'green' surcharge prior to the service charge.

[Crossy]

Try Malaysia where it's +++, service charge, luxury tax ,VAT

Really? Last I time I was in KL (June 2013), it was the same as Thailand (1% less) i.e 10% Service Charge and 6% VAT

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It's been a while now, but the PJ Hilton was certainly +++ in Uncle Chillis

[wooloomooloo]

And can get significantly worse should they creatively add on a 'green' surcharge prior to the service charge.

What website is adding a 'green' surcharge for the benefit of the rest of us. Never heard of this, but interested in knowing this vague assertion.

[Fookhaht]

I still prefer paying my tips voluntarily and personally to staff who render good service: Generous tips to the skillful and no tips to the sullen or lazy.

I think it's a better motivator than the communal-share method where even the dead-beats get a take in the share.

Edited April 17, 2014 by Fookhaht

[stevenl]

I still prefer paying my tips voluntarily and personally to staff who render good service: Generous tips to the skillful and no tips to the sullen or lazy.

I think it's a better motivator than the communal-share method where even the dead-beats get a take in the share.

Especially since the service charge is quite often not shared among the staff, but simply a hidden extra for the owner.

[GrantSmith]

And can get significantly worse should they creatively add on a 'green' surcharge prior to the service charge.

What website is adding a 'green' surcharge for the benefit of the rest of us. Never heard of this, but interested in knowing this vague assertion.

I think it's one of those "reduce your carbon footprint" check boxes... Not uncommon, but annoying if you're not paying attention in the process...

[taotoo]

And can get significantly worse should they creatively add on a 'green' surcharge prior to the service charge.

What website is adding a 'green' surcharge for the benefit of the rest of us. Never heard of this, but interested in knowing this vague assertion.

Upmarket resorts with an eco-angle. Six senses for example. It's not a 'vague assertion' just because you're not aware of it.

[KittenKong]

So, what exactly is this "10% Service Charge?"

It's <deleted>, that's all. Just like the extra VAT.

In civilised countries the advertised price has to include all taxes and obligatory extras, as one would expect.

[GrantSmith]

So, what exactly is this "10% Service Charge?"

It's , that's all. Just like the extra VAT.

In civilised countries the advertised price has to include all taxes and obligatory extras, as one would expect.

Not entirely true..

The USA is a civilized country, you'd agree yes?

Singapore (a democratic dictatorship by most standards) is a civilized country, no?

New Zealand, another of those so called civilized countries..

Just 3 examples of civilized countries that aren't in the habit of showing all inclusive pricing...

Don't get me wrong, I find it quite annoying having to add additional local taxes and service charges as much as the next - being Australian we're quite lazy for want of a better term and our consumer laws ensure all inclusive pricing - but Thailand is not alone in this habit that is this gross/net pricing.

[KittenKong]

In civilised countries the advertised price has to include all taxes and obligatory extras, as one would expect.

Not entirely true..

The USA is a civilized country, you'd agree yes?

Singapore (a democratic dictatorship by most standards) is a civilized country, no?

New Zealand, another of those so called civilized countries..

I chose my words very carefully. You can draw your own conclusions.

[Carmine6]

My home city of Boston charges 10% hotel tax, 7% meals tax (may be more now) and a 10% tax on rental cars. Basically, it's a way to sock taxes on to people who have no local vote.

Is that it? Was just checking a car rental receipt for San Jose, California. In addition to 11.11% tax which looks like an airport tax, there's a CA Tourism Assessment of 2.6%, sales tax of 8.75%, and a $7.50 transportation fee. There's a also a 3.5% tax, that didn't apply. Since the car rental is right across the street from the main terminal, transportation is walking, plus an elevator ride to the level your car is on.

Total taxes and fees were $15.77, on a $35.27 rental car for a day. 44.7% effective rate.

[chiang mai]

Amateurish, if you want see real taxation you have to go to the UK, we invented the sport, we have at least three taxes on everything, why we even have have one when you die.

[KittenKong]

Amateurish, if you want see real taxation you have to go to the UK, we invented the sport, we have at least three taxes on everything, why we even have have one when you die.

At least in the UK the taxes/fees are included up-front and dont just get added on at the checkout when you are least expecting them.

When I see a sign with a price on, that's what I expect to pay. Anything else is just deceit, as the likes of Ryan Air know well.

[donim]

On 4/17/2014 at 7:27 PM, Crossy said:

Try Malaysia where it's +++, service charge, luxury tax ,VAT

But in KL the most of the rental would drop the last + for you, and simply not register you in the system.

And the first two + are neogitable, you can say I stay 3 days and pay the room rate now, for both convenient to use round numbers. Room rate 50. Give them 150 instead of 3x56.