Resort Fees May Cost Casinos Goodwill

Pop quiz: You run a hotel in a destination that’s had a rough few years and is reliant on customer goodwill for repeat visitation. Someone tells you a way that you can make more money from your customers, at the cost of annoying and potentially alienating them. Do you:

A) Ask them if they’ve lost their mind.

B) Conduct a survey of guests to gauge just how receptive they are to the idea.

C) Apologize profusely to guests and implement this innovation in as transparent a method as possible.

D) Initiate this innovation with as much small print and in the most annoying way possible.

If you chose (D), congratulations! You’ve done the same as many of those who run Las Vegas hotels, and rolled out a resort fee.

Resort fees—those mandatory per-night add-ons of between $3 and $25 that include charges for services guests may or may not use during their stay—migrated to Las Vegas in the early 2000s, but have recently gotten a second wind. Caesars Entertainment had for years railed against them, even staging a showgirl “protest” march down the Strip in July 2011 to call attention to its policy of not charging a resort fee. Yet Caesars recently reversed course and began charging fees at its Las Vegas properties. And the South Point, another casino that had advertised its lack of resort fees, also started charging them.

What is the appeal of resort fees? A common misperception is that they are not taxed. That’s not true, as anyone who has paid them knows. But resort fees are a way for casinos to capture a greater share of what you pay for a room. If you book via a third-party booking engine, the casino has to split a portion of your standard rate with that broker. But the casino keeps all of the resort fee. It also helps that separating the fee out makes the room look less expensive at first blush; by the time the guest finds out about the fee, they may have already committed to buy (or even arrived to check in).

On paper, resort fees make perfect sense for casinos; in practice, they may lose more in goodwill than they gain in revenues. But, alas, there is no place for customer goodwill on a balance sheet. With the fees boosting revenues and guests paying them despite their objections, don’t expect them to disappear.

Resort fees: fair or unfair? Tell us in the comments section below.