Question of the Day April 19, 2014
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Q:About when did the first resort fees arrive in Las Vegas and about how much do they add to the total income per day, week or month now? Are there any records to show year-by-year progression?
A:It’s difficult to say when the first resort fee was imposed in Las Vegas, although Station Casinos is generally credited (if that's the correct term) for being among the first to launch the concept, with its fuel surcharges in the early 2000s, which also found guests charged daily for phone calls, regardless of whether or not any had been placed. The company was subsequently involved in a class-action lawsuit, along with the Hilton, Wyndham, and Starwood chains, and was forced to send compensatory coupons to 940,000 former guests who'd stayed at Station properties between April 1, 2001 and April 4, 2004, not because of the fees, per se, but because they were not clearly indicated to guests at time of booking or prior to checkout.
Boyd Gaming properties were also early birds. "These fees have been in place at some of our properties for many years; Sam’s Town has had this type of fee in place since the 1990s, though I don’t have a precise date on when they were introduced that decade," writes Director of Corporate Communications David Strow. "The Stardust charged them as well, starting in the ‘90s and through to its closure."
David Schwartz, director of UNLV’s Center for Gaming Research, pegs the rise of resort fees as a countermeasure to the slowdown in travel that occurred in 2001-02. They covered everything from wi-fi access to use of the gym. Whether this constituted added value remains highly debatable, as some of the ‘amenities’ were already covered in the cost of the room.
MGM Resorts International’s Jenn Michaels rationalized it to Schwartz this way: "Before, if guests wanted a bottle of water, they had to take it out of their mini-bar and pay for it. If they wanted a newspaper, they had to go downstairs and pay for it. Now those services and amenities are already part of the experience they paid for."
The customer finds himself caught between a rock and a hard place. If hotel occupancies are high, the casinos have no incentive to drop the resort fees. If customers stay away, the resort fees are a means of getting more money from fewer patrons.
The last of the majors to bow to charging resort fees was Caesars Entertainment, which did so in the first quarter of 2013. According to Director of Corporate Communications Gary Thompson, "we break out gaming and hotel revenues in our 10-K and 10-Qs, but not resort fee revenue. My guess is it's in the low single digits," as a percentage of revenue.
It’s much the same at Boyd. "I’m unable to provide a specific estimate on how much revenue is generated from these fees, as we do not break out revenues beyond a few general categories (gaming, F&B, hotel and ‘other’)," says Strow. "In our latest 10-K, we reported total hotel revenue (which includes all room-related charges and rental fees) of $265.4 million, which was 8 percent of our gross revenues ($3.36 billion)."
So, you might say that resort fees were a small percent of a small percent. LVA cannot recall resort fees ever being reported as a line item. Casinos prefer to concentrate on gross room revenue – into which resort fees fall – and revenue per available room (RevPAR).
Some of the fees seem rather whimsical: MGM charges a "bed fee" that allows you the choice of two queens or a king-sized bed. "But a $20 charge to guarantee a non-smoking room at the MGM Grand was quickly snuffed out after it threatened to billow into a public relations fiasco," wrote the Las Vegas Review-Journal’s Tim O’Reiley. It’s nice to know there’s one resort fee out there that isn’t here to stay.