Upcharge means an extra fee on top of the base price of a product or service. In hospitality it's used when a customer asks for an upgrade or a special modification to their order. This extra cost covers the extra value, labour or premium ingredients involved in fulfilling the request.
Upcharges are important in hospitality because they allow businesses to stay profitable while offering customisation to guests. They offset the cost of premium ingredients, extra staff time or special equipment needed for certain requests. Upcharges also allow businesses to offer more options without blowing out their base price and keeping their menu accessible to a wider audience.
Let’s say you're a front desk manager at a boutique hotel. A guest checks in and asks for a sea view room. Your standard rooms are all booked out but you have a premium room with an ocean view available. You might say, 'We can upgrade you to our Deluxe Sea View room for an upcharge of £50 per night. This room has a stunning view of the coast and comes with a private balcony and a complimentary welcome drink.' This way you're giving the guest what they want and the hotel is being compensated for the higher value room.