Delusion: Hotels Think Guests Like Mandatory Fees

Filed Under: Hotels

I’d say resort and destination fees are about as popular with consumers as loyalty program devaluations (commonly referred to by program leaders as “enhancements”).

But not everyone thinks so, apparently. An organization representing New York City hotels claims that guests actually like paying these fees!

Basics of resort & destination fees

Resort and destination fees are additional mandatory fees when you’re booking a hotel that often aren’t disclosed in a transparent way.

Why do hotels charge these fees?

  • They’re a way for hotels to try and get more revenue without increasing the “transparent” room rate
  • It works out better for the hotel than an increase in the room rate, since historically they don’t have to pay travel agents a commission on these fees
  • In some areas it also allows hotels to skirt the typical occupancy tax that otherwise applies on the room rate

What’s awful is that these used to primarily be limited to resorts, but nowadays we’re seeing these fees spread to all kinds of city hotels.

One online travel agency has taken on these fees

While I don’t for a second believe they did this out of the kindness of their hearts, I’m in favor of a change that booking.com recently made. Recently Booking started charging their standard commission on all mandatory hotel fees, which eliminates one of the major reasons that hotels charged these to begin with.

Like I said, they most definitely did this to line their own pockets, and not to look out for consumers. At the same time, I tend to think that anything that is done to give hotels less of an incentive to add these fees is a good thing.

Hotels think consumers want to pay fees

Skift has a story about how Expedia is considering following Booking’s lead when it comes to collecting commissions on these fees.

They present both sides of this debate, including quoting the CEO of the Hotel Association of New York, which represents nearly 300 New York City hotels, which collectively have 80,000 rooms and 50,000 employees.

The CEO of this organization claims that guests “appreciate the value offered” by these fees:

“Resort and urban fees provide real tangible value to the guest and there is plenty of empirical evidence that a majority of guests have no problem with it, and appreciate the value offered. Booking’s adding a commission to that is akin to tacking on a charge on to a range of other products and services guests consume at a hotel after checking in, and will only increase the cost to the consumer while unfairly penalizing the largest customer base: hotels.”

I’m curious what the “empirical evidence” that they’re referring to is. Perhaps they reason that guests “have no problem with” the fees because they end up paying them (because they’re, you know, mandatory)? And therefore they also reason that guests appreciate the value offered by these fees?

He’s also completely off base to argue that this is the same as online travel agencies charging for additional services after check-in. These fees are mandatory, and there is no way to avoid them. There is a way to avoid other add-ons after check-in.

For the most part, hotel “destination fees” simply include:

  • Things that were already included for free (access to the gym, luggage storage, free wifi, etc.)
  • Things that have very limited value (free local phone calls)
  • Things you might find in a mailer full of coupons (usually 10-15% off something you probably don’t care about it)

So… would those of you who appreciate the value offered by destination fees please make yourself known in the comments? Bueller? Bueller? Bueller?

I have a challenge for the CEO of the Hotel Association of New York: if guests like these fees so much, and if you’re unhappy about online travel agencies taking a commission on them, why not make them voluntary? It seems like a win-win-win:

  • Consumers have choice
  • Hotels still win since people will want to pay these due to how much value they add (apparently!)
  • Online travel agencies won’t be able to get a commission on these fees, since they won’t be mandatory
Comments
  1. “a majority of guests have no problem with it, and appreciate the value offered” – what is the basis for the statement, he likely made it up.

    If it’s really so then let customers opt in to get it , or opt out to exclude it if they dont see any values.

  2. Guests *do* like these fees, and clearly indicate that fact with their shopping behavior. If people are given a choice between a $100 hotel with a $50 resort fee, or a $125 hotel with no resort fee, they’ll mostly choose the former. I remember around 2013, when Caesars was the last big Vegas chain to implement resort fees. They held out for a long time, but eventually gave up when they were losing business to their competitors.

    While the press release announcing them was written with more marketing-friendly terms, when they announced resort fees, they pretty clearly said, “We tried to price our hotel rooms honestly, and in return, you people went elsewhere. So here you go. You want resort fees, you get resort fees.”

  3. Aric with that logic people really like predatory lenders and loan sharks. After all, if people didn’t like them they wouldn’t exist right?

  4. maybe business travelers like the free drink when the fee includes a bar credit and then not having to expense it outright?

  5. Ben, every New Yorker has always known the Hotel Association of New York is run by a bunch of profiteering folks always trying to squeeze the last cent out of consumers with as many inane fees and taxes as possible. Little wonder why they invested so much energy and money in trying to crush local AirBnB hosts, who generally offer great values in a ridiculously overpriced city. New York City hotels — and Ben’s reviews regularly underscore this — generally remain a really lousy value for the money. And service in those hotels lags compared with most other major cities across the world. I know this from staying in a number of them as do other readers.

    It’s time to keep the pressure on their CEO. Like you I am eager to hear much more re “plenty of empirical evidence that a majority of guests have no problem with” those fees. OK, show up the evidence folks. Such a piebald statement is akin to the empty words of a certain grandpa who spent the weekend crowing about a new deal that averted a manufactured crisis… yet that deal was basically stuff negotiated six months ago.

    It all goes back to a sticker a respected seventh-grade science teacher had posted in his classrom: QUESTION AUTHORITY

  6. I hate this so much and go out of my way to avoid such fees. They are not legal here in the UK (where the whole price must be shown up front, inclusive of taxes and fees) thankfully.

  7. They’re looney to think we like and or accept these fees. I actively book away from properties that charge resort or destination fees.

  8. As a resident of Las Vegas, I have this perspective…

    One reason why resort fees continue to exist and are growing, at least in Las Vegas, where even “dumps” now charge “resort fees”, is that there is no one around that is motivated to complain (other than bloggers who find it a rich source of blogging material).

    No one living in Las Vegas is goin’ complain, it just brings in more revenue, and they don’t stay at the hotels anyway.

    The hotels obviously aren’t goin’ complain, by instituting those fees, they’ve just increased their net profit without doing anything different, and by the widespread adoption, they aren’t being punished by others not doing it…

    Tourists don’t complain (except at check out when it’s too late, and shame on them for not being aware of their reservation details), cause coming to Vegas for them (or those on business) is a vacation or a paid trip by others, they just look at it as part of the “vacation experience”

    Obviously the Nevada AG ain’t goin’ come up swingin’ (are you kiddin’ me???, the hotel industry is one of the biggest in NV) and the FTC that SHOULD be doing something about it, well, it’s just not their priority.

    I do watch hotel rates carefully in Vegas (hey, everyone needs a hobby), and it gets the most hilarious when (a) the resort fees being charged, actually exceed the “hotel charge”; or (b) when the “free local phone calls” don’t include a phone in the room. What is also crazy, is that Orbitz and the like, do include the resort fees when you get to their check out page, but any price sort on hotels is based on the hotel charge exclusive of the resort fee, which of course makes a joke to any innocent person looking to book a hotel.

    So short answer, at least in Vegas, those in power can do whatever they want cause no one there, from the Nevada AG to the tourists, are motivated enough to bring the political pain to question this ridiculous situation.

  9. I don’t think he’s as wrong as you think. Business travellers likely have a cap on the rate they can spend on a hotel room (I do), and those fees are a way around that. The business travellers would spend 200+50 vs 225 because it works for expenses.

  10. Booking isn’t challenging the resort fees because they are “wrong”, they are just wanting their cut on this additional revenue stream.

    No one who should care, gives a rat’s a* about the consumer.

  11. I think they’ve confused people using the amenities coming from the fees to get their money’s Worth (particularly in places like NYC) with being happy that they weren’t given a choice in the first place…

  12. Sigh. These people need to learn that you’re not supposed to drink the bong water.

  13. Boiled down, the reason we hate these is 1. the extra click (tap) required to learn the actual total cost and 2. the impossibility of sorting our search results by actual real price. We’re suffering an inconvenience at home, in front of our screens at 02:30 when we’re planning our travel. The trouble is all behind us when we’re at the hotel.

    Seems to me there’s a regulatory opportunity here. And a marketing opportunity. Why isn’t Trivago guy reassuring us shirtlessly that he’ll tell us the truth, “the price is the real price” and “Gold Star TrivagoSlick” properties are those wonderful hotels that don’t hide mandatory fees in fine print.

    Meanwhile, more clicks and no effective price sort on booking sites.

  14. I hate to say it, but from where I sit, they’re right. I refuse to stay at any property that charges a resort or destination fee. I’m also in the extreme minority. The reality is, very few consumers actually book away from hotels that charge the fees, because a) they’re on business and the corporate contract either eliminates it, or the employer pays it, b) elites on vacation just have to stick to the chain for their “free” breakfast and elite benefits, or they are exempted from the fee, and c) infrequent travelers simply book the lowest base rate and ignore the fees. Plus, just look at many of the comments on any post complaining about destination fees. You’ll find plenty of people say “the all-in price is the same as XYZ alternative so what’s the problem?” Bottom line is, people aren’t voting with their wallets, thus, these junk fees are just going to keep expanding.

  15. I try to avoid hotels that charge resort/destination fees. If hotel A is $100 room rate + $25 resort fee, and hotel B is $125 room rate and no resort fee, I’m booking hotel B. I don’t care that hotels A and B have the same all inclusive price; it’s the principal.

  16. Good article Lucky!

    I hope that hotels.com do the same soon too.

    And sending my regards wishing your mom well.

  17. I would dispute any resort fee that wasn’t fully disclosed to me prior to booking with my credit card company. If you are adequately informed at booking that your chosen hotel plans to gauge you with what is essentially a second room rate, then it’s on you. You can always book away which is what I do.

  18. You can always vote when you have choices.

    In Las Vegas, there are few hotels who don’t have a resort fee, even the “dumps” in Las Vegas are charging it… I’m only aware of 2 or 3 hotels that still don’t charge resort fees in Las Vegas, and not sure you’d want to stay in any of them, or even if would, they’d be fully booked. The Howard Johnson’s on Tropicana is one such “choice”.

    When there are no choices, it’s hard to be “high and mighty” and say you’ll “exercise” a choice.

    Just sayin’…

  19. Again in Las Vegas, almost all places I’m aware of, DO disclose their resort fees. If you go to a booking site, like Orbitz, you may not be aware of them until you get to the booking page, but they are ultimately disclosed to those who are paying attention, prior to the actual payment.

    The primary issue anymore, is really not whether they are adequately disclosed or not (not saying it’s not a valid concern, eg they SHOULD be disclosed WHENEVER the prices are advertised, you should not have to wait to find out till the booking page), it’s whether or not they should exist in the first place.

  20. Resort fees are a scam and should be banished from all hotels simultaneously. Otherwise, it won’t work. Most consumers don’t think a lot during booking which explains why Caesars was losing bookings.

    When we launched Waylo, we would display the total price including taxes and fees only. Anything else, we believe is deception. However, conversion was really low. Users complained that the prices were higher than on Expedia and Booking: they were comparing our prices with taxes and fees to the nightly rate they saw elsewhere! We had to cave in start displaying nightly rates to enable an apple to apple comparison.

    A popular 3 star hotel at the end of the Vegas Strip often has rooms for $15/night but a $44/night resort fee! It is a joke. We challenged the GM to make the fees optional and make a hard sell at check-in similar to the insurance sales push at car rental counters. He knew there would hardly be any takers.

  21. I only stay in Las Vegas, when my points vacation includes the fees.

    Otherwise, I stay in St George, Mesquite or Victorville and just drive through Vegas 😉

    There was a bill in congress to abolish the resort fees, which I sent positive comments to multiple congress people, but it failed to make it to the floor for a vote. Too bad!

    Perhaps in 2020 we can get rid of all these do nothing incumbents and see if some new blood will help.

  22. The so-called benefits of these fees are things that were formerly included in the base price, like wifi and gym, or ludicrous, like a tour of Grand Central Station. A credit for the purchase of alcoholic beverages is insulting to me, since I don’t drink, and to people whose religion prohibits,
    it. Given a choice between two hotels, one with such a fee and one without it, I will choose the one without it even if the net price is the same.

  23. One hotel fee in NYC that I would pay would be a fee to hire police to toss the dope sick junkies off of the steps of penn station, and clean the bathrooms of Penn and Grand Central stations. Love or hade Rudy, but when he was mayor the city was clean.

  24. @Steve – assuming you’re not being held at gun point, no one is forced to go to Las Vegas or stay in their hotels. Just sayin’…

  25. Nothing will change until a politician decides they can get elected or reelected if they make a case out of this.

  26. Let’s see….

    People (allegedly) like paying extra mandatory hotel fees;
    Hotels dislike paying extra mandatory commissions.

    Can they spell “contradiction”?

  27. Add any stupid deceiving fee and you won’t see my money or my face in your hotel. Plain and simple.

  28. Hahaha, guests like fees? What world do these people live in?
    Resort/destination fees should be illegal.

  29. It’s all about greed. If the hotels think it’s such a great deal for their customers (and not for the hotels), then make it an option. That’s a better way to find out than by doing another survey that few people answer honestly anyway.

  30. @Donna. Totally agree, No one has to go to Vegas. Not a huge fan of the city and resort fees give me an additional excuse to blow off the next industry conference when it comes to Vegas vs Orlando.

    After hearing the head of the NYC hotel industry. it’s another city I don’t have to visit as frequently.

  31. “Resort and urban fees provide real tangible value to the guest and there is plenty of empirical evidence that a majority of guests have no problem with it, and appreciate the value offered.”

    It seems that blatantly lying has infected all parts of the USA, including the hotel industry.

  32. Seems like hotels are forced to charge these fees in order to stay competitive (since rolling them into the room rate would make the rooms look more expensive in search engines versus hotels that charge separate hidden fees). Search engines like Expedia probably don’t want to show “all-in” prices our of fear of appearing less competitive than their competitors (after all, their main selling point is that they have the “lowest rates” on the market). So customers are on the hook for reading all the fine print and figuring out what their actual out of pocket would be, then comparing it to other options – a huge pain since it makes searching for the best deal a lot harder. The only way to put a stop to this practice is by having regulatory agencies step in and require that advertised hotel rates include all taxes and fees rather than just the room rate. They’re already doing this with airfare, so perhaps there’s a precedent to apply similar rules to hotels?

    Out of curiosity, do these extra fees and taxes also apply to hotel award bookings, or only when purchasing the cash rate?

  33. It’s not just hotels but some hostels too (what the heck?!?) Hostelling International in New Orleans charges a $1 resort fee!!

  34. It’s a scam..pure and simple. Airlines started charging for baggage, hotels followed with their ‘resort fee’ folded by a ‘destination fee’…whatever the hell that means.
    The list of ‘valuable’ things you get have an equivalent value of zero. free phone (thanks but I have my cell); free wi Fi (thanks but you told me I get that with my status); free bottle of water (thanks, but again I thought I got that with my status); free entry to the fitness center (Thanks but I’m a walker) oh and that coupon for a free drink at the bar (top shelf, not included), Thanks, but my sponsor probably wouldn’t approve.
    Hotels should be ashamed. You want a total of $200. A night, then charge $200 for the room and not $175.00 + your moronic $25.00 fee.
    I promise, the first hotels to dump the fee will be sold out for many nights to come….We will love it!

  35. I hate resort fees! All Kimpton hotels charge resort fees wherever they are. It is ridiculous to charge a resort fee for the safe in the room, or use of chairs at the pool. Aren’t these things fixtures? Will they next charge for linens and towels? It used to be that they were only in resort towns like Vegas and Fort Lauderdale. But NYC and Washington DC? Who are they kidding? You ought to be able to opt out if you aren’t going to use them. The Kimpton Solamar in San Diego charges resort fees and it does not have a single computer and printer for guests to use. The wine and app free reception is a joke as they have a red and a white wine, a beer on tap and lemonade-no free soda, and a very limited amount of some very cold disgusting app-it was 4 tiny pieces of congealed flatbread pizza the night I went. No thanks!

  36. In 2009 Feds required that airlines clearly publish all mandatory ticket costs. I remember my joy at being able to compare apples to apples.

    In 2019 the Feds should do the same with hotels. It is time for some joy when booking hotels.

  37. I live in Vegas too but I’m one of the many locals who do actually stay at Strip hotels. My wife and I like to do regular “staycations” for one or two nites at a time, six or seven times a year.

    Many times I have asked check-in staff do people complain about resort fees and the answer always is in the affirmative. Most hotels inform you at check-in about the resort fees to ensure no surprise on check out.

    As a premier member with one of the big hotel chains I really despise the charges for internet, gym access, phone calls etc., ie mandatory Resort Fees. I recently stayed at actual resorts in Australia and Hong Kong and I was comped room upgrades, premium internet, breakfast and gym access without these larcenous fees.

    But that’s not the worst of it – most Strip hotels now require a deposit of around 75% of the room rate. So if you book more than a month in advance you have to pay the credit card bill – basically you are paying for the room in advance without the advantage of advance purchase room rates.

    What the hoteliers don’t seem to appreciate is as leisure travelers Resort Fees and advance deposits ensure that we have had to reduce our stays on the Strip. We’d love to stay more often for longer but don’t because of these fees.

    Seems to me that it’s odd that companies in the hospitality business insist on being really inhospitable by charging these fees and advance deposits.

  38. Must be an american problem. Where I travel this does not exist. If it were I would just book another place.

  39. I recently booked a W Private Residence unit in Ft. Lauderdale on Booking.com 1 week ahead of my stay which was non-refundable due to the short notice. I looked high and low for references to resort fees and saw nothing, even at checkout. In my confirmation email I was notified there was not only a mandatory resort fee but also a valet parking fee. They added 33% to the cost of my room and if I couldn’t have afforded to pay it, my whole trip would have been ruined! Resort fees are ridiculous and deceptive, especially when they’re not disclosed up front.

  40. New York is one of the worst hotel markets in the entire world. Yes, I have stayed in HHonors, SPG, and IHG at the top tier guest and every time the experience was subpar. Why? Why one would go to NY? How about HKG, SIN, or Tokyo? And if you have some business in NY, why not doing it remotely?

  41. In the EU these Resort fees are not allowed.They used to” flourish” years ago but were banned & forbidden since they are deceptive & are no longer legal. The total price must be shown up front, inclusive of taxes and fees .All the extra charges need to be fully disclosed to European consumers upfront.
    Really terrible that NYC hotels which are among the most expensive hotels in the world and already have one of the worst ratio “Value for your money” will implement Resort fees.

  42. @JC asks if laws in Europe are different. For a supposed Delta frequent flyer, and Amex Ex Plat member, she really does only seem to roam around the boonies 🙂

  43. lol “empirical evidence”. Put 2 prices for the guest to choose from, one with and one without the fee. Then they will see the “empirical evidence”

    The mental gymnastic these people do…

  44. As someone who worked running an NYC hotel for many years I can tell you with certainly that we eliminated the “a la carte” pricing of various services (gym, pool, wifi, etc.) and included them in the mandatory facility fee that the complaint of being “nickel and dimed” disappeared. Was everyone thrilled to pay the fee? No, of course not, but the complaints were far fewer than we received before.

    I am no longer involved in the business so have no skin in the game.

  45. @ Steven — Except nowadays major hotel groups offer all members free wifi, so that’s a moot point. What NYC hotel has ever charged for gym access? That’s the thing — these largely aren’t things that were otherwise being charged for, but rather were things that were included.

  46. I never patronize hotels charging these “robber” fees. I’d rather drive a few miles out of the way or stay at a mid-priced hotel. The only reality for owners to understand that guests do not like the fees is when guests stop paying them and use the mouth-piece of reviews to drive the point home.

  47. SO if you provide things that every consumer gets something i.e. free litres of Fiji water, a tote bag, and complimentary beach chairs then people do recognize the fairness in it. Also if consumers would not book via OTA’s and would book direct then hotels could afford to give those in the price but when 20% goes straight away to Booking , and maybe a franchise fee hotels are forced to play this silly game. Book direct “Stop Clicking Around”.

  48. Boycotting hotels, going to hotels that don’t charge resort fees, will never change the situation. The cat is out of the bag.

    The only thing that will change it is regulation. To date, it’s not a priority for the FTC or any other governmental agency, least of all, the Nevada attorney general’s office whose state understandably has the hotel industry’s ear, leg and torso.

  49. Yep, myself and my company’s travel department love destination/resort fees so much that we BOOK ELSEWHERE, even if it costs more, rather than contributing to this dishonest practice.

    Granted, hoteliers probably won’t care. BUT, when we have done this, we do let the GM of both the losing hotel & winning hotel know why we booked what we booked. For some of the winners, it’s been a nice windfall when we book conferences or extended stays with them. They DO remember.

  50. As a hotelier I can say that we do not charge for things that are expected in a hotel. Fitness Center, Phone Calls, internet. It’s 2019 and that is the cost of doing business. However we are a hotel of less than 100 rooms.
    Larger hotels charge as the infrastructure to support these things cost $$$ to maintain but to nickel and dime will only send your guests elsewhere. Disclose the costs in the beginning and a traveler can make an educated decision to stay. The WOW factor is given when you do not hit them in the pocket book in the end.
    There are so many designations of hotels; economy, midscale, select service, full service, luxury, and resort. Many travelers do not understand what sets them apart. With each type of hotel demands a different level of expected service and amenities.

  51. HAVE PERSONAL CONTACT WITH YOUR CITY COUNCIL MEMBER, ASSEMBLY PERSON, STATE SENATOR. THEY CAN EASILY BAN THIS ABUSE THROUGH LEGISLATION (as long as the unions don’t mind).

  52. It’s called fraud. If it’s MANDATORY then it is part of the base cost for the room. If they think that most guests like this idea then make this fee optional and see what happens.

    If this continues to spread in the industry then soon they will be saying that their rate only gets you the empty room. If you want a bed in it then add $50, linens $20, towels etc $10 and so on.

    Airlines used to do this but it now has been outlawed. Their $90 flights suddenly became $350 when you tried to book them because of the MANDATORY fees.

  53. Within 10-years, Airbnb will be taking another bite out of hotels in destination cities because people recognize that parking fees, valet tips, resort fees, taxes, and the obligatory bogus room charges that appear can be controlled without sacrificing a good time. The key is education and acceptance by the general public. The more expensive hotels become, the more consumers will resist. It just takes time, that’s all.

  54. These fees should be illegal and I refuse to stay anywhere that charges them. Thank god as a Hyatt Globalist they wave the fee. If the did not wave the fee… good bye Hyatt.

  55. I detest having to pay for something that is supposed to be ‘free’. I am Platinum in Marriott (wish SPG had no part of this disaster) and used to get all of this stuff free. Why do I now have to pay for something that I seldom use.

  56. It Hymas nothing ton do with money, it has to do with what is right. It also has to do with treating loyal customers correctly.
    One of the most arrogant posts I’ve ever seen!

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