How does that phrase go…”What happens in Vegas, stays in Vegas?”
Well, you know what else is staying in Vegas? Your money that you had no plans to spend. MGM is increasing resort fees to more than $50 per night at four hotels in Las Vegas and that means more money out of your pocket.
If you’re not familiar with “resort fees,” they are daily, supplementary charges that are NOT included in the initial booking cost. These fees apply regardless to if you booked via a third party (e.g. Expedia, Orbitz, etc.) or directly through the hotel website.
Resort fees were introduced in the early 2000’s by Station Casinos. Most tourists did not experience these additional fees because all the Station Casino properties are away from the Las Vegas Strip.
However, in 2009-2010, the United States experienced a downturn in the economy and Las Vegas was hit hard. The number of tourists dramatically decreased and so did the hotel revenue. In an attempt to stifle the losses, the larger Las Vegas hotels (on the strip) began charging “resort fees” too.
WHY HOTELS CHARGE RESORT FEES
Las Vegas began charging resort fees to stifle the losses but there is an additional benefit…resort fees are a way for hotel companies to avoid paying commissions. When someone books a room through an online travel agent (e.g. Priceline, Expedia, or a regular travel agent), the hotel company (i.e. MGM Resorts) has to pay a commission. You know what they don’t pay a commission on? Resort fees!
In most cases resort fees go directly to the company’s bottom line and they don’t have to share that revenue with anyone.
More recently, the Las Vegas hotels have implemented parking fees too (which can be as high as $30 per night).
Yes, you read that correctly…$80 more PER NIGHT.
Las Vegas business has been hurting. In fact, in 2018 Las Vegas saw a four-year low for visitation.
Tourists are compelled to purchase hotels rooms when they see a cheap rate. However, resort fees make discounting harder. During the slowest nights of the week, resort fees can be even more than the room rate and as a result, resort fees may be harming the hotel business there.
In a city where ancillary revenue (e.g gambling, entertainment, restaurants, etc.) is important, it’s desirable to fill rooms at any price rather than leaving them empty.
So what are some Las Vegas hotels doing now that they find themselves in the hole? Doubling down…as one does in Vegas. MGM hotels is increasing resort fees at MGM, Aria, Bellagio, and Vdara from $39 to $45. Once you include tax, that means you will be paying closer to $52 per night. Unfortunately, they are matching their “competitors” as Wynn, Venetian and Palazzo already charge this amount.
Both Marriott and Hilton are being sued by governments over their deceptive practice of resort fees so I find it surprising that MGM would choose this route.
Las Vegas is a budget-buster (even for individuals that do not gamble) and resort fees are a sore topic for many Las Vegas tourists. To add insult to injury, some Las Vegas hotels that charge resort fees offer little or no amenities to justify it in the first place. It’s little more than a hidden fee at these properties.
In my eyes, fewer benefits and higher prices, is a questionable strategy for putting heads in beads.
Las Vegas is an interesting market because all the hotels have these fees, leaving you with no options so I’m not completely sure where this path is going to lead. Consumers could vote with their wallets, but that (obviously) hasn’t worked terribly well.
What do you make of this situation? Do you have plans to visit Las Vegas?