Resort fees on Las Vegas Strip are on the rise. Here's why they're likely here to stay
Ed KomendaLAS VEGAS – Here's an unpalatable dish in the world of Sin City tourism: Resort fees.
Along the Strip, nobody likes paying them. But hotel companies have come to depend on those concealed nightly charges that run as high as $45 and inflate hotel bills – often to the surprise of the family that booked the trip.
Hitting revenue numbers that appease shareholders is a big business money problem that has analysts certain resort fees will remain a permanent fixture.
And they’re rising.
Since May, two major casino companies have raised resort fees on the Strip to the highest they’ve ever been – ballooning vacation costs and raising a tough question about the future of tourism in Southern Nevada: How much is too much?
'We are constantly evaluating prices'
On Aug. 1, MGM Resorts International raised resort fees $6 at three high-end properties along the Strip. That means a stay at ARIA, Vdara or Bellagio with now run an extra $45 per night – on top of the base room rate.
The increase at the MGM properties came three months after Wynn Resorts raised resorts fees at Wynn and Encore from $39 to $45.
“We are constantly evaluating prices,” said MGM spokesman Brian Ahern in a statement, “to ensure they properly reflect the business landscape and the services and amenities they support.”
What are resort fees for?
A resort fee is a mandatory charge that includes a bundle of services guests have come to expect during a hotel stay.
That bundle could include free Wi-Fi, access to the pool and, at resorts in big travel cities like New York and San Francisco, a free drink or discounted breakfast.
“But it is mandatory," said Chad Beynon, a senior analyst at Macquarie Group Limited, "so even if you don’t use those products you still have to pay a $30 to $50 fee that is not being advertised when you book your room."
Even so, these resort fees in the fine print have been a way for hotels to increase revenue on top of the money drawn from advertised rates.
If a tourist planning a one-night stay on a Saturday in November at the MGM Grand planned the trip today, the base room rate would run about $145. Tack on taxes, resort fees and taxes on those fees, and the bill balloons to $206.
At a more expensive MGM like the Aria, a bill on the same night would run $344. Of that total, $51 is made of resort fees and taxes.
How much money can resort fees generate for a casino?
Many millions. It's a revenue flow MGM needs to keep shareholders content.
The largest employer in Nevada, MGM has laid off more than 1,000 company employees – most of them in Las Vegas – since April to cut costs and boost earnings.
Raising room fees $5 could generate an extra $50 million for the company, according to Beynon.
"MGM has company-wide goals to reach certain financial targets for 2020 that are extremely important for them to hit,” Beynon said. “If you could add another $50 million per year with resort fees, that is meaningful for a company to hit their goal.”
Resort fees have been a go-to solution since the recession crumbled the economy, Beynon said, but they also make Las Vegas more vulnerable during times of recession, when people have less to spend.
The cost of doing business
Resort fees have also helped hotels offset the money spent on giving visitors what they want and have come to expect.
After all, it costs money to outfit every hotel room with a flat screen television and Wi-Fi, alarm clocks and coffee makers. In the hotel industry, it's called "amenity creep."
Aside from the costs to build a hotel room, there are other costs that come with allowing a traveler to book that hotel room with ease online.
It costs casinos money to do business with online travel agencies – or “OTAs." Resort companies pay a commission to companies like Expedia and Travelocity. But that commission is only tied to the advertised base rate for a night's stay.
Hotels pay no commission on the resort fees billed later, according to Curtis.
“By raising the rates using resort fees, those additional revenues are not subject to the OTA commission,” said Anthony Curtis, publisher at Vegas Advisor. “It’s dual purpose in Las Vegas: First to keep the rates down and second to keep more of their own revenue without having to duke it off to their online travel partners.”
In a courtroom across the country, resort fees tacked onto hotel stays have taken center-stage.
Misleading customers?
The attorney general for the District of Columbia sued Marriott, saying the hotel company is misleading customers by advertising room rates without including mandatory resort fees.
According to the lawsuit, Marriott doesn’t include mandatory resort fees in the room rates it displays online. Consumers only discover the fees after they begin to book a room. They may also be called “amenity fees” or “destination fees.”
The lawsuit says at least 189 Marriott hotels worldwide charge the fees, which range from $9 to $95 per day. The attorney general is seeking a court order to require Marriott to advertise those fees up front.
Marriott says it doesn’t comment on pending litigation but is continuing discussions with other state attorneys general.
Meanwhile, in Las Vegas, at least one casino executive has commented on the danger of inflating resort fees.
'The straw that breaks the camel’s back'
On an Aug. 5 earnings call, Caesars Entertainment CEO Tony Rodio expressed concern about the repercussions of targeting travelers with resort fees.
“Over time, at some point there’s going to be the straw that breaks the camel’s back,” Rodio said. “I don’t think we’re there yet, but I want us to be very judicious and cautious about taking those rates any further. It’s certainly a revenue stream that’s hard to walk away from and it’s been accepted at this point, but we’re getting pretty high.”
A transplant who spent decades in the Atlantic City casino market, Rodio may have been "a little surprised that they’re able to get away with this" in Las Vegas, according to one gaming analyst.
"He wants to make sure they’re not alienating their customers or striking a nerve with their customers," Beynon said.
In an email to the USA TODAY Network after MGM raised resort fees on the Strip, a Ceasars spokesman wrote: "We have no plans to raise resort fees at this time."
At Vegas Advisor, Curtis is hearing from customers long ago peeved.
'The hell with you'
Since the 1980s, Curtis, founder of LasVegasAdvisor.com, has a been tracking the feelings of tourists on the Strip.
One of the top Las Vegas peeves? Resort fees.
“We hear it all the time from our customers, going, ‘I’m not coming anymore. I will not come to Vegas anymore," Curtis said. "I will go to a regional place. I will go to Laughlin, I will go to Reno.’"
In Reno, resort fees are cheaper. At the Atlantis Casino Resort: $30 per night. At Grand Sierra: $29.95. At Circus Circus: $28.
On the Strip, resort fees are likely here to stay – and grow. But tourists pining for the Las Vegas of old, Curtis said, still have some options left.
"The old Vegas model is still here downtown, it’s still here at the locals casinos, but it’s not in most places on the Strip, and I don’t think you’re going to see a return," he said. "There’s going to come a point where the customer's going to revolt all the way, and say, ‘The hell with you.'"
How to figure out resort fees before booking
There are several ways tourists can learn about the resort fees they'll be paying before booking a trip, according to Curtis.
• Check a website that tracks resort fees – like Vegas Advisor.
• In the footer of each property website there's often a FAQ link. There, you can usually find the resort fees with what they cover.
• After choosing your date of stay on travel booking websites, you're often asked to choose a room type. Under each room type there's a button with the average night total, and under that is information about the resort fees.
• Pay attention to your reservation summary: Taxes and resort fees are listed there.
• Ask a reservations clerk to quote a complete price including resort fees, taxes and any other fees.
Vegas hotels that don't charge resort fees
• Four Queens, 202 Fremont St.
• Candlewood Suites, 4034 Paradise Rd.
• Best Western Plus Casino Royale, 3411 S Las Vegas Blvd.
• Jockey Club, 3700 S Las Vegas Blvd.
Contributing: The Associated Press.