“Resort fees” are extra charges, on top of a room rate, that aren’t optional. In other words they’re part of the price of a room, but the hotel advertises a lower price instead. That’s on face deceptive.
I understand the logic of charging a resort fee in a market where everyone else is doing it. If a hotel charges a $250 room rate and a $30 resort fee, that’s $280 a night. If another hotel charges $270 a night they’re actually $10 cheaper — but appear at first glance to the consumer to be more expensive. Once resort fees are standard in a market, a hotel loses by not charging them.
What’s become especially egregious in recent years is the spread of resort fees to new markets, under different marketing. City hotels aren’t resorts and instead they promote “destination fees.”
Resort Fees are Ok With the FTC
Guidance from the Federal Trade Commission, though, is that resort fees are fine if they aren’t deceptive which means “a hotel prominently discloses the resort fee upfront and includes it in the total price.”
Generally speaking resort fees make it difficult to know at the start of search how much a hotel will cost, and make it difficult to compare prices, but consumers are aware of such fees before they stay.
How Loyalty Programs Handle Resort Fees
Hilton and Hyatt don’t charge guests resort fees when redeeming points. Hyatt waives resort fees for top tier elites on paid stays. Marriott makes guests using their points pay resort fees.
Marriott’s terms though do say that if a hotel includes internet access in their resort fee then they must offer program members a different benefit.
Participating Properties that have mandatory resort charges, which include internet access, will provide a replacement benefit, to be determined at each Participating Property’s discretion.
Hilton Honors though says that if a resort charge includes an elite benefit, then it’s not an elite benefit at that hotel,
These Amenities are offered solely at the discretion of Hilton HHonors Worldwide, L.L.C., and the individual hotel. Not all Amenities are provided by all hotels within the Hilton Worldwide portfolio. When payment of a resort charge is required, check individual hotel for availability of included Amenities.
Resort Fees: Guests are ‘Leaving Las Vegas’
A year ago it appeared that resort fees were hurting Las Vegas. Resort fees are a price add-on, and higher room rates depress demand.
Las Vegas hotels generally reduce room rates as low as they have to in order to fill rooms, figuring they’ll make money on a guest’s other spending while in town. They want the gambling, shows, drinking, retail and other activities. However resort fees are effectively a floor for how low they can drop prices. When hotels are empty that’s a problem.
Now with Las Vegas guest levels especially low we’re starting to see cracks in Vegas resort fees.
Some hotels have eliminated recently-added parking charges. When demand drops hotels try to fill rooms, they can do that via lower room rates or by reducing total trip cost.
Meanwhile other hotels have eliminated resort fees on a promotional basis,
SLS Las Vegas, Golden Nugget and Red Rock Resort have launched temporary marketing campaigns in recent months offering rooms without resort fees, taking advantage of the interest the topic receives on social media.
MGM says they aren’t raising fees, not at all surprising if occupancy is down. Meanwhile the CEO of Caesars says he understands that raising prices in a deceptive way can depress demand,
“We are certainly sensitive to the fact that we can hurt our own profitability and revenue growth if we get exorbitant or do things that have no value to them.”
Guests don’t like opaque pricing, and higher pricing hurts hotels in a challenging market. If demand were up in Las Vegas we wouldn’t see hoteliers tinkering with these fees. Still, it remains hard to walk away from them without everyone doing it at the same time.
What Needs to Happen
There are really two equilibria here: no one charges resort fees (although there’s an incentive for a given hotel to defect if resort fees are permissible as it makes their rates look cheaper than the competition) or everyone charges them.
If even one hotel charges them, we’d expect a shift towards everyone charging them. Destination charges were relatively new in New York a year and a half ago but have since become more common. So what’s stopping a hotel from instituting a resort (or destination) fee, leading others to follow?
To the extent resort fees aren’t illegal we need significant shaming of hotels to change their incentive. Hotels need to respect their guests, and that starts with honesty about the most basic element of a reservation, the rate.
The real solution though it seems to me comes from online travel booking sites. They need to deliver value to their customers by helping to compare options with all-in pricing. We’ve seen this in many ways from Google, it’s shocking that neither Expedia (and affiliated sites) nor Booking (and affiliated sites) have made meaningful moves in this direction.