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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 intention of spending as Cosmopolitan Hotel (casually) announced they would be increasing their resort fee.
Actually they didn’t announce it, per se, they simply just changed the number overnight. So if you’re searching for it, you’ll find it buried on their FAQ page.
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. But 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…a ~$45 resort fee + $30 to park (an additional $75 PER NIGHT) and that does NOT include what you’re paying for the actual room.
A CATCH 22?
Generally, tourists are compelled to purchase hotels rooms when they see a cheap rate. However, resort fees make discounting harder.
For example, midweek is slow for hotels in Las Vegas and you will often find that resort fees are more expensive than the room rate.
Naturally, when rooms aren’t being reserved, hotels discount the rooms. But what happens when visitors recognize there is no value because resort fees exist?
In other words (and as an extreme example), let’s say they offer a discounted 1 cent room but there is a $200 resort fee. Would you book it?
As a result, resort fees may be harming the hotel business.
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 have all the Las Vegas hotels done now that they find themselves in the hole? Doubling down…as one does in Vegas…and stick it to visitors by increasing the resort fee.
Las Vegas continues to be a budget-buster (even for individuals that do not gamble) and resort fees are a sore topic for many tourists.
If you’ve been reading this blog for some time, you may remember my terrible experience at the Bellagio last time I visited the city. So imagine paying a resort fee for that AND not being able to leave a review.
Las Vegas business is hurting. In fact, the city has seen a steady decrease in visitors over the last 3 years.
Additionally, all the hotels on the strip have been closed for the past 5 weeks due to COVID-19 so that hasn’t helped either.
But offering fewer benefits and higher prices, is a questionable strategy for putting heads in beds.
Las Vegas is an interesting market because all the hotels have these fees, leaving you with no options to avoid them, so I’m not completely sure where this path is going to lead.
Note: Last year, MGM hotels increased resort fees at MGM, Aria, Bellagio, and Vdara to $45. Once you include tax, that means you will be paying closer to $52 per night. And unfortunately MGM has only matched their “competitors” as Wynn, Venetian and Palazzo already charge this amount. Ouch!
What do you make of this situation? Have you ever visited Las Vegas?