Why Isn't the Resort Fee Part of the Room Charge!

Why is there a resort fee in regard to revenue? Why not charge the resort fee as part of the room charge? Is there some kind of tax advantage?

The resort fee is dreaded and hated by travelers, but provides distinct benefits for the properties that charge them.

To begin with, by separating out the resort fee from the base room rate, hotels can advertise lower room rates, which are more attractive to potential guests searching online. Lower upfront prices help these properties rank higher in online travel searches and appear more affordable than competitors. This is especially true for travelers who compare room rates without adding in resort fees or even realizing that they're being charged. A lower base rate makes the property appear like a better deal at first glance, while a higher room rate can dissuade potential guests before they even delve into the booking details. Then, the resort fee is often seen as a "necessary evil" after the decision-making process is well underway.

Also, hotels can offer promotional discounts on base room rates during off-peak times, while keeping resort fees fixed, ensuring consistent ancillary income. Conversely, they can waive resort fees as a perk, making loyalty members feel rewarded without altering room rates.

Second, unlike optional services (like minibar charges), the resort fee is mandatory. So it affords the hotel a reliable revenue stream.

Third, the resort fee, in the early days, allowed hotels to save on online travel agency (OTA) commissions. OTAs like Expedia and Booking.com charged commissions based on the room rate, but not on additional fees like resort fees. Nowadays, some OTAs suck a commission off the resort fee as well, though not all. To maintain the desired level of profitability for those that do, hotels can balance OTA bookings with direct bookings in various ways.

Finally, in some jurisdictions, resort fees are taxed differently (or less) than room rates, allowing hotels to reduce their tax burden.

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Comments

Gregory Mawson Jan-21-2025

resort fees

 If hotels can advertise lower room rates by separating out the resort fee from the base room rate why not advertise the room rate as $1 and then add a $100 resort fee?

Donzack Jan-21-2025

First thing

First thing let’s,terminate the actuaries. And I cleaned that up.

Robert Byrne Jan-21-2025

Mis-selling?

I think not including resort fees in the up fromt price in adverts amounts to mis-selling and would probaly be illegal here in the UK and throughout Europe.

John Hearn Jan-21-2025

Greh has a future

Get this man a job at MGM! He's going places!

Stewart Ethier Jan-21-2025

Junk fees

From Google:  The Federal Trade Commission (FTC) recently ruled that businesses must disclose all mandatory fees upfront, including resort fees, for short-term lodging and live-event tickets. This rule is known as the "Junk Fees Rule".

Louis666 Jan-21-2025

resort fees

MGMis currently doing promotion that offers comp nights but you still have to pay the resort fee. Which is why I stick with the Four Queens.

Raymond Jan-21-2025

"Comps"

Louis666 is right.  On my trip last month, I stayed at three different hotels, all "comps".  The Cal, comp, no resort fee.  Sahara, comp, no resort fee.  Luxor, comp, resort fee charged.

Charging the resort fee on a comp seems to be a way of life for MGM and Caesars.  So if you want to stay on the strip anywhere south of Venelazzo/TI, you pay the fee.  I knew the deal and have no complaint about it, as I was still getting a bargain.

steve crouse Jan-21-2025

Adding and subtracting

Resort fees are for people that can't add and subtract.
Consider it the same thing as a sales tax.
Whatever it's called, it's money out of poscket.

Larry Stone Jan-21-2025

mgm gold card

if you have the mgm gold card (or above), the resort fee is waived for comp rooms

Lucky Jan-22-2025

resort fees and comps

I am a Diamond at Caesars and have never paid a resort fee on a comp, which all of my stays are.  My son is a Platinum, and his comps have the resort fees waived also.  We go to Laughlin 2 or 3 times a Summer to enjoy Lake Mojave, and at Harrah's there, never a resort fee.  I guess there is some level of how much you play which determines the resort fee or no fee.

Question of the Day - 21 January 2025

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