It seems to be the 'norm' in Australia now. Fiji is 3% which is outrageous when you then add your 3% 'currency conversion' fee plus the spread on the currency the bank will be making.
They charge it because they can in my opinion. When's the last time you showed up at a hotel with cash? Bet that would throw them if we all started to do that.
Off topic, but you need a bankwest or 28 degrees credit card, or a Citibank debit card. No spread or fees on FX.