Taxi Scam at San Francisco Airport Hotels Exposed

Undercover video shows San Francisco airport hotels requiring cab drivers to pay kickbacks for fares

Drivers call it extortion – forced to pay hotel staff as much as $25 for a single fare from an airport hotel in Burlingame to downtown San Francisco. For longer trips to San Jose or Oakland, the payment can be as high as $40 or $50. If drivers don’t pay, they say hotel staff simply calls a driver who does.

…At the Embassy Suites, in a 10 minute span, cameras caught one front desk employee taking money from drivers on three separate occasions and sticking the cash directly into his wallet. At the Marriott and Hilton, our team observed valet staff accepting money from drivers at the curbside pickup area on multiple occasions.

This is common in other cities too, hotels allow it (despite chain policies) because they can pay their employees less when a job comes with income from third parties.

They see the cab drivers as compensating their doormen, so they pay those employees less. Further, the kickback schemes kelp retain employees, it takes time to cultivate illicit kickbacks from drivers and there would be high switching costs if the doorman was to go to another hotel, they would have to get to know the culture and the other doormen and take time to develop their cab relationships in the new location.

And drivers pay because regulated taxi fares in many cities are set above market clearing prices. Or at least on average pickups of passengers from hotels reduce waiting times, so they are more lucrative at the regulated fare (since fares cannot legally vary by location of pickup in most jurisdictions) than trolling for rides. So it’s worth it to them to do so.


Taxi Cab Lot in Arlington, Virginia

Meanwhile, I’ve observed the practice predominantly at better but not the best hotels, presumably the latter take the view that the practice put their staff at odds with guests and hinders customer relatios. Further, the high end customer service focus likely leads to paying a higher wage and better retention in any case. And in the U.S. the tips are also more likely flowing more freely from the guests themselves, hence the allegiance tends more towards the guest than the cab driver.

Here’s one cab kickback story a driver shared with me while I was staying at the Fairmont Royal York.

There was a long line of cabs in front of the hotel, and Steve was out front calling them over. Now, Steve had a thick accent, asked us where we were going and repeated it to the cab driver. Steve got it wrong, fortunately I told the cabbie where we actually wanted to go and that was no problem.

The driver explained that Steve enforces a $5 kickback on all airport runs, so he always needs to know where you’re going. If a cabbie doesn’t pay the $5 bribe, Steve advises guests against taking a particular cab because ‘they get into lots of accidents.’ The cab driver said that never happens at the Four Seasosn, they don’t accept bribes there, at the Royal York it’s required.

In Santa Monica “the ‘cut’ is about 10% and is referred to as a ‘cookie’.”
I at least appreciate knowing I’m at odds with the doorman rather than the doorman acting as my agent. Maybe this would help:

I’m not a fan of the practice, given the function it plays in hotel employee compensation and retention I’m not sure ‘better enforcement’ of bans will be as strongly pro-consumer as expected.

(HT: Jennifer Billock)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Hey, you leave Red Top out of this! :p They’ve “saved my bacon” (to use one of your terms that I like) a number of times recently when Uber is on crazy surge out of DCA, or Uber drivers cancel my pickups because I’m only going to North Arlington (they hold out for the longer, more profitable trips). And they’re also my go to for pre-arranged early morning rides to DCA. Always there like clockwork. Sometimes you can’t beat the old-fashioned way.

  2. While, I’m not doubting that this is going on, but I have a feeling that this was all started by the taxi drivers themselves? Not as an extortion payment but rather a tip to the valets? like tipping a hotel clerk checking you in $50 in Vegas to get better room?

    The video did not show the hotel staff demanding payment from the taxi driver, but rather taxi drivers offering a ‘bribe’… the TV station needs to investigate posing as a new driver who doesn’t know the ‘system’ and catch the hotel staff stating that a payment is necessary. Then I’ll be (and the police) convinced that cash is demanded by the hotel staff, not offered by the drivers.

  3. So you think the practice of bribing front desk clerks for an upgrade is fine (the “$20 trick”) but disapprove of taxi drivers bribing doormen or valets. That’s not a consistent position. The reality is, bribery of any kind contributes to social breakdown. The most corrupt societies are the worst to live in. Do we really want the US turning into Mexico, where bribery has infected the culture right down to the justice system?

  4. mary — taxi drivers are being extorted by doormen/concierge et al — they are not bribing the doormen.

    completely agree that bribing and extortion leads to social breakdown. it enables so much of what is wrong with society.

    tipping is also wrong in the sense that only the front line really gets tips whereas everyone else does not. And their pay isn’t that much higher. The dishwashers make minimum wage but without clean dishes, nobody is eating! As well, tipping only serves the business owner in that they do not have to actually pay their employees a fair wage and hope that the customer makes up the difference. I have had several situations where I had foreign customers and ended up PAYING out of my own paycheck to wait on them — having 10% of their check being recorded as tips declared — and I received nothing.

    I was a waitress once and a terrible one at that during college. what I found was that our busboys were being stiffed by the other waiters and waitresses. I found out because I had an awesome Saturday night (made $400) and paid out the same busboy the standard 10% of my cut that previously accused me of stiffing him on a horrible night (I made 47.50 that day in tips and gave him the 7.50) . He actually gave me back a $20 – and I was like wth? With my passable Spanish, I was able to tell him that no matter what, when I have a good night, then you have a good night.

    I never bribed anyone or paid off the host – who also tried to extort me. No matter how horrible the host was to me, from that night on, every busboy tried to be my busboy, because they knew that no matter what, I was fair, and when things were bad or slow, I was actually more than generous. This was a great situation for me because I was a terrible waitress (possibly because I wasn’t paying bribes to the host and was always being slammed.) But, it worked out with me being honest and fair and having help from the busboys to water the tables and bust them quickly. They made more money and so did I.

  5. What Mary said. Tipping is a form of bribery, and should be banned at restaurants too.

    Next time you’re in a city with no Uber (Austin) and the doorman asks “where are you going”, politely but firmly respond “I will tell the driver myself”.

  6. Classic location for this scam: doubletree Metroplitan in NYC. But I agree, Bangkok is the worst—- Royal Orchid 24 hrs a day.

  7. Saying it does not happen at higher end hotels is putting your head in the sand. Working in one of these type hotels, I can definitely tell you it happens on a daily basis, though it might be more discreet. It also is not just the doormen, it is also the cab drivers as noted in the other comments. Basically a little mafia ring.

    Sad thing is that it is the guest who ultimately pays, because it may take longer for the driver who greases palms to get there than one who doesn’t. Also, the driver paying out is more prone to long hauling or overcharging in order to make back that money.

  8. This is news? In NYC this has been going on for decades. In 2010 the City tried to legislate the removal of the kickback scheme and it failed. I stay at the Sheraton on 53rd and 7th and take a taxi there four times a week for two years. The doormen make well over $150k a year in kickbacks as told to me by numerous cab drivers. Me like everybody else will tip the doorman a few bucks for hailing the cab. Then the cab driver kickbacks $5 to $25 depending what airport and whether a cab or limo is used. So the doorman makes a double “tip.”

    When you get into the cab, the doorman goes up to the drivers window and says, “nice to see you,” and shakes the hand of the driver. The driver just pressed a folded up bill into the drivers hand.

    One morning I was leaving for LaGuardia at 5 am and bellhop guy speared me in the lobby to carry my bags to the taxi. He knows he is now getting a kickback, I mean tip. I get into the cab and the bellhop goes up to the drivers window to shake hands, all of a sudden the driver speeds off without paying. I said, “you didn’t want to pay did you.” The driver proceeded to spew a few choice words about the hotel doormen and how hard it is to make a living.

    Hotel doesn’t care because I alerted them. City gave up. Life goes on.

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