A resort fee, also called a facility fee, a destination fee, an amenity fee, or a resort charge, is a separate mandatory fee that a guest must pay to receive the key to their room rental. The fee is charged in addition to the room rate.
Contents
Definition
A resort fee is a daily mandatory additional charge that the hotel separates out from the advertised price. Consumer advocates equate this to paying a second room rate. The average resort fee costs $24.93 per day.
A resort fee is collected separately from the advertised room rate. A guest may pay in advance with a credit card for a room online. There he is paying the advertised room rate and all necessary taxes. This guest may assume that is the final price of the hotel. When the guest arrives at a hotel with a resort fee, he will be forced to pay the additional resort fee for his entire stay at the front desk when he checks in.
Sometimes this concept as referred to as drip pricing. One price is advertised out front to lure in a customer but when the customer goes to book there are then mandatory unavoidable fees, taxes and other add-ons that incrementally drip and increase the original advertised price.
The resort fee can be more than the advertised cost of the room.[1]
There is no limit to what the resort fee can be. Two hotels in Florida have resort fees of over $100 per day.
Location
Resort fees are unique concept to North America. Though mostly found in tourist destinations in the United States, some resorts in Mexico and the Caribbean also charge resort fees. A handful of hotels in Canada have also recently taken up the practice.
Since resort fees are a concept unique to North America, they are just starting to be spread to the rest of the world through North American brands.
Resort Fees are most prevalent in tourist locations. Resort fees are usually seen as a nuisance by travelers. Since regular business customers whose loyalty is important may go elsewhere if charged these fees, the resort fee tends to be located largely in tourist areas. Resort fees in tourist areas affect unsophisticated travelers who do not know about hotel billing and do not travel often. They also affect international tourists who are unfamiliar with the breakdown of a US hotel bill and who may not speak English.
Resort fees are also commonly located in tourist areas where there is resort fee collusion. These are areas where every hotel decides to charge resort fees. Currently resort fees apply to all 62,000 rooms on the Las Vegas Strip.
Resort fees are not found just at resorts. Many budget hotels also charge resort fees. The Days Inn in Miami Beach, the Super 8 in Las Vegas and the Hotel Pennsylvania in New York City are all two star hotels that charge resort fees.
Background
Hotels have long charged guests for specific amenities at a hotel. Examples include $10 to enter the pool, $5 to watch a movie or a $2 bottle of water. In 1997 some resort hotels began to charge mandatory fees. A mandatory resort charge would be to charge every guest $10 for entering the pool regardless of whether or not they planned to use it. This enables the hotel to advertise itself as costing $90 but in reality the hotel costs $100. The hotel would demand $10 as a resort fee for use of the pool when the guest arrived at the hotel.
Benefit to Hotels
The major benefit to the hotels is the profit. Resort fees brought in $2.47 billion to the hotel industry in 2015.
As trends in how consumers book hotels change, hotels attempted to recoup losses. Online hotel search and booking tools like Expedia, Travelocity and Hotel Tonight take a percentage of a reservation and then pass the reservation on to the hotel.
Expedia owns Hotels.com, Hotwire, Orbitz, Travelocity and Trivago. Priceline owns Booking.com. That means that most search tools that potential customers of US based hotels will be using one of these companies. All of these companies do not have the resort fee included in the price listed when you search by price.
A hotel loses a certain percentage from every reservation made on one of these sites. Hotels that charge resort fees yet are listed on these hotel search and booking sites only list their advertised rate and not their resort fee. This is because the hotel booking site takes a percentage of that advertised rate. When the hotel collects the resort fee at check in, separate from the rate purchased for online, the hotel collects 100% of that profit.
Resort fees also affect travel agents. Travel agents can earn commission on the advertised rate of the hotel. They do not collect a percentage of taxes or fees. Furthermore, travel agencies legally need to know what the resort fee for each hotel is so that they can properly pass it on to their clients. Failure to do so could result in a lawsuit to their agency. Individual travel agents have found it difficult to keep up with changing hotel resort fees.
Resort fees allow hotels to recoup losses from customers who do not book directly with the hotel.
Resort fees have been very profitable for hotels. MGM Resorts International stated the following regarding Las Vegas hotel rooms during a Q1 2011 conference call:
"Our RevPAR (revenue per available room) in the first quarter was up 16%, including resort fees. Excluding resort fees, REVPAR was up 11% in the quarter year-over-year."
Benefits to Consumers
The hotel lobby, the American Hotel and Lodging Association, has stated that the resort fee provides many benefits to consumers.
Hotels say that customers like that many features and amenities of the hotel are included in the resort fee so it eliminates nickel and diming.
MGM Resorts International senior vice president Mr. Alan Feldman, has said:
“We have heard negative feedback from guests, but we’ve also heard positive feedback, from guests who are happy that they are no longer paying à la carte for different services. They don’t feel nickeled and dimed.”
No tourist has come forward to publicly state that they enjoy resort fees.
Exchange for Service
Hotels have stated that tourists are paying a resort fee for a variety of amenities at the hotel. The American Hotel and Lodging Association said that resort fees pay for a range of hotel amenities, from pool use, gym access, towel services, to Wi-Fi and newspapers. They state resort fee is a payment for a group of services.
Consumer advocates such as the National Consumers League and Travelers United have stated that since this is a mandatory fee, it is not an exchange of service. A guest could decline all of the services allegedly offered by the resort fee and still be forced to pay the mandatory resort fee. These advocates state that there is no exchange of service. It is simply an additional amount that the hotel collects on top of the advertised room rate.
Disclosure of Fees
Resort fees have been criticized by consumers for not being fairly advertised prior to purchase.
Katherine Lugar, President and CEO of the American Hotel and Lodging Association said:
“throughout the booking process, hotels are transparent about costs, fees and taxes.”
This assertion has been debated by consumer advocates. They argue that though hotels may list a resort fee, they do it at the very end of the booking process in extremely small print.
Charlie Leocha, President of Travelers United, said
“The charging of mandatory resort fees by hotels results in a misrepresentation of the true price of the hotel room.”
Sometimes hotels improperly list the fee as a tax. The Arizona Grand Hotel in Phoenix, Arizona lists their resort fee under the taxes section of their website. A resort fee is not a tax.
Consumer advocates have noted that if consumers choose to book their hotel based on price-based search tools on Expedia, Priceline or Hotel Tonight, the resort fees are left off in the initial price comparison search. A hotel could be anywhere from $10 to $50 more expensive per night but it is not listed with the advertised price.
A Priceline spokeswoman Flavie Lemarchand-Wood said the practice of tacking added fees onto the advertised price after a hotel is selected is not deceptive.
"We are compliant in disclosing the fees prior to purchase. It is very important [for the consumer] to read everything on the page"
Expedia, Priceline and Hotel Tonight do not take commission from the resort fee. These online booking companies have no incentive to publish the resort fee. The hotel takes the entire amount of the resort fee. These companies are further disincentivized since if one site begins to add the resort fee to the advertised rate, it will look like the price on that site is higher and consumers would go to a competing online booking site.
Consumers groups such as Travelers United and Kill Resort Fees contend if a hotel charges a mandatory fee, it should be included the nightly room rate. Hotel rating systems such as AAA have taken a policy of deducting points from a hotel being reviewed if they charge resort fees. AAA has said resort fees are a major annoyance of travelers.
Taxes
Since resort fees are a mandatory fee that is not included in the advertised room rate of the hotel the fee is often priced differently. Since a portion of the room rate is separated out, that portion is not considered for taxes. This is lost revenue for the city and state. A hotel in New York City that charges resort fees only has the Javits Center Tax and the New York City occupancy tax apply to the advertised rate of the hotel. If the resort fee is $50, that is $50 that is not being used in the calculation of those taxes. Resort fees in New York City are only being charged the sales tax for the state and city and not the occupancy tax.
Legality
Resort fees are often legally questioned. Currently there is no law in the United States that allows for hotels to charge mandatory fees in addition to their base room rate. There is also no law banning this practice.
Advertising mandatory fees that are not included in the room rate such as resort fees are illegal in Europe.
Numerous bodies have authority on this issue in the United States. The US Congress, state legislatures, the Federal Trade Commission and the National Association of Attorneys General. None of these groups has thus far taken any legal action regarding resort fees.
The Federal Trade Commission
The Federal Trade Commission (FTC) is the US government organization with authority to regulate the hotel industry. On the subject of resort fees, FTC attorney Mamie Kresses said
"The fees are not illegal as long as they're disclosed."
What constitutes a clear disclosure, however, has been a matter of debate between the hotel industry and consumers.
In 2012, the Federal Trade Commission advised 22 hotel operators that their online rate quote totals, which did not include certain fees, may need to be updated to comply with FTC regulations.
Since then the FTC has taken no legal action on resort fees. Consumer advocate Chris Elliott wrote
"The FTC has failed to protect consumers from what is perhaps the most dishonest fee in the travel industry."
In 2016, FTC Chairperson Ramirez wrote a letter to Congress on the subject of resort fees and said:
“in my view……the most efficient and effective means to mandate the type of industry-wide requirement you propose would be through legislation.”
US Senator McCaskill introduced the “Truth in Hotel Advertising Act of 2016” in the US Senate on February 25, 2016. The purpose of the bill is to "prohibit unfair and deceptive advertising of hotel room rates, and for other purposes."
The Federal Trade Commission (FTC) published a report on the harm of resort fees on January 5, 2017. The report concluded "that consumers are likely being harmed by the hotel industry practice of disclosing mandatory resort fees separate from posted room rates, without first disclosing the total price."
Challenges to Resort Fees
Due to the increasing use of resort fees at hotels, many consumers have begun to challenge them being applied to their hotel bill. This has been done by asking the hotel desk manager to remove the fee, by disputing the fee with the guest’s credit card company or by suing the hotel in small claims court.
Consumer travel advocate Christopher Elliott advises anyone who was blindsided by an add-on fee to dispute the charge with their credit card company. While the booking sites may allow small-print disclosures, some credit card companies have taken the consumer's side in these disputes and reversed the charges. Moreover, merchants that have a high volume of disputed charges can run afoul of credit card providers, which in egregious cases have the ability to terminate a vendor's right to accept credit cards.
Kill Resort Fees, an advocacy group working to eliminate resort fees, stated that all resort fees should be challenged.
Lauren Wolfe, Founder of Kill Resort Fees, said that
"Resort fees are the equivalent of being charged a second room rate. No law exists protecting hotels ability to charge two room rates for one night so all of these second rates also known as resort fees should be challenged by consumers."
Organizations Advocating For The Ability of Hotels to Charge Resort Fees
- American Hotel and Lodging Association
- American Gaming Association
Organizations Advocating Against Resort Fees
- Kill Resort Fees
- Travelers United
- National Consumers League