Resort fee
A resort fee, also called a facility fee, a destination fee, an amenity fee, an urban fee, a resort charge, or a hidden hotel booking fee, is an additional fee that a guest is charged by an accommodation provider, usually calculated on a per day basis, in addition to a base room rate.
Resort fees originated in North America. Though mostly found in tourist destinations in the United States, some resorts in Mexico and the Caribbean now also charge resort fees. A handful of hotels in Canada have also taken up the practice.
In many countries, it is illegal to charge additional fees not disclosed at the time of booking, and the fees are currently being legally challenged in the United States.
United States practice
In the United States, resort fees have been a contentious practice. Currently, hotel resort fees can be viewed as illegal based on existing state consumer protection laws.Numerous bodies have authority on this issue in the United States, including the U.S. Congress, state legislatures, the Federal Trade Commission, and the National Association of Attorneys General. To date, 50 attorneys general have opened an investigation into hotel resort fees. Marriott was issued a subpoena on June 6, 2017, by the Attorney General of Washington, D.C., regarding their non-cooperation in the investigation, as the hospitality industry continues to stall any legislative solution to the issue. Since then the Attorneys General of DC, Nebraska, Pennsylvania and Texas have taken action against hotel resort fees. Non-profit consumer protection group Travelers United sued MGM, Hilton, Hyatt and Sonesta. The FTC announced a notice of proposed rule making in 2022 and US President Biden talked of hotel resort fees in his 2023 State of the Union. The FTC released its proposed rule on junk fees on October 11, 2023, and in the it specifically highlighted hotel booking fees and resort fees.
Background
In 1997, some resort hotels began to charge a mandatory resort fee, regardless of which facilities were used by guests. Advertising a room without including the resort fee in the price enables the hotel to advertise a lower room rate than the actual price of the room.Resort fees were previously found just in tourist locations at actual resorts. Still, they are common throughout the United States in exclusive resort destinations and at two-star hotels in American cities. The fees are usually seen as a nuisance and a scam by travelers. They also affect international tourists who are unfamiliar with the breakdown of a US hotel bill and may not speak English.
Resort fees are most commonly charged in tourist areas, where there is collusion, with all hotels deciding to charge such fees. Currently, resort fees apply to almost all 62,000 rooms on the Las Vegas Strip. Resort fees, along with the recent introduction parking charges, are believed to be a significant cause of a reduction in tourism to Las Vegas.
Resort fees may also be charged by budget hotels. For example, the Days Inn in Miami Beach and the Super 8 in Las Vegas are two-star hotels that charge resort fees. Econo Lodges around Orlando have begun to charge resort fees.
The average resort fee in the United States is $42.41, about 11% of the overall cost to stay at the hotel each night. This is a nightly charge on top of the advertised room rate.
New York City has seen a surge in hotel resort fees. In New York City, the fees are often called destination fees, facility fees or amenity fees. There were 15 hotels in New York City with resort fees in 2016. In 2018 there were 84. By 2020, there were over 125.
Objections
Consumer advocates describe the fee as paying a second hidden room rate. The average resort fee in 2015 was $24.93 per day. It can be more than the advertised cost of the room. There is no limit to what the resort fee can be. Two hotels in Florida have resort fees of over $100 per day. Many hotels in Las Vegas advertise room rates that are lower than the resort fee, causing the total price to be more than double the advertised price.The practice is widely known as drip pricing, particularly in consumer rights contexts. One price is advertised to attract customers, but when a customer checks in, there are then mandatory fees, taxes, and other charges that incrementally drip beyond the price initially advertised.
Consumers have criticized resort fees for not being fairly disclosed prior to booking accommodation. Consumer advocates argue that hotels lie when they claim the fee pays for any services.
Katherine Lugar, former president and chief executive officer of the American Hotel and Lodging Association, said, "throughout the booking process, hotels are transparent about costs, fees and taxes.” That assertion has been challenged by consumer advocates. They argue that though hotels may list a resort fee, they do so 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."
Hotels often try to hide the fee as a tax. A resort fee is not a tax. The Arizona Grand Resort & Spa listed its resort fee as a tax. The Life Hotel in New York City lists their fee as an "NYC mandatory City Hotel Fee."
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 to read everything on the page". Expedia, Priceline and Hotel Tonight do not take a commission from the resort fee. These online booking companies have no incentive to publish the resort fee. The hotel takes the entire 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.
Consumer groups such as Travelers United and Kill Resort Fees contend if a hotel charges a mandatory fee, it should be included in the nightly room rate. Hotel rating systems, such as AAA, have deducted points from a hotel being reviewed if they charge resort fees. AAA has said resort fees are a major annoyance of travelers. Frommer's travel guides have come out with numerous articles against hotel resort fees.
Benefit to hotels
The major benefit to the hotels is the profit, while still being able to show 'reasonable' room prices to the public. Resort fees brought in $2.47 billion to the hotel industry in 2015. MGM Resorts International stated that, for Las Vegas hotel rooms in 2011, "Our RevPAR in the first quarter was up 16%, including resort fees. Excluding resort fees, REVPAR was up 11% in the quarter year-over-year."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. A hotel loses a certain percentage from every reservation made on one of the sites. Hotels that charge resort fees but are listed on these hotel search and booking sites list only their advertised rate and not their resort fee. That is because the hotel booking site takes a percentage of that advertised rate. When the hotel collects the resort fee at check in, separately from the rate purchased for online, the hotel collects 100% of that charge.
Resort fees also affect travel agents. Travel agents can earn commission on the advertised rate of the hotel and do not collect a percentage of taxes or fees. Furthermore, travel agencies must legally 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. The American Society of Travel Advisors launched an advocacy campaign to support the federal bi-partisan bill to end undisclosed hotel resort fees in October 2019.
Hotels also benefit by offering a free room that is not free. Hotels and resorts also often collect resort fees from guests who are paying for their stay with loyalty points, since the resort fee is categorized a mandatory charge for bundled services as opposed to part of the room rate. In gambling locations, rooms are often comped for guests who are frequent gamblers. These hotels may offer a "comped" room but still charge a resort fee so the room is not complimentary at all.
Benefit to consumers
The American Hotel and Lodging Association has stated that the resort fee provides many benefits to consumers. Hotels say that customers like many features and amenities of the hotel to be included in the resort fee to avoid nickel and diming, but there is no proof that any services are included in the fees, which leads many consumers to deem it to be dishonest pricing.MGM Resorts International senior vice president 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."
The American Hotel and Lodging Association said that resort fees pay for a range of hotel amenities, such as pool use, gym access, towel services, Wi-Fi, newspapers, shuttle service, daily parking. They state that the resort fee is a payment for a group of services. This is the hotel taking advantage of its customers, because it will charge the fee even if the guest does not want any of those services. There is no way to opt out of a supposedly optional fee-for-services arrangement.
Consumer advocates such as the National Consumers League and Travelers United have stated that since it 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 resort fee. The 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.
Most hotels tax the resort fee at the hotel occupancy tax rate. This is a tax rate reserved for hotel room rates. Services are taxed at the sales tax rate in the United States. The hotel occupancy tax is higher than the sales tax rate. Consumer advocates argue this shows that the hotel resort fee is considered part of the room rate for the hotel and for tax purposes, not an exchange of service. A direct exchange of service, such as a hotel charge of bringing an extra bed to the room, would always be taxed at sales tax. A resort fee is normally not taxed as an exchange of service, but as a second room rate.