Mandatory Resort Fees on the Rise
Washington, DC – Do the hotels in your room block charge resort fees? If so, your exhibitors and attendees are paying higher mandatory resort fees than they did last year. In the first six months of 2016, resort fees have increased 8% to an average of $19.52 per night, according to a report by Resortfeechecker.com, a web site that tracks resort fees.
By comparison, resort fees grew by 5.2% for the full year of 2015. “There is no question that resort fees are on the rise, both in terms of price and prevalence,” said Randy Greencorn, Co-Founder, Global Travel Innovations Inc., which publishes Resortfeechecker.com. “More and more hotels are charging resort fees, and the fees are getting higher.”
Among the top destinations for trade shows, average resort fees range from $13.95 per night in Orlando to $24.65 per night in Las Vegas. From December 2015 to June 2016, resort fees increased 17% in Orlando, 6% in Las Vegas and 11% in New York. The markets with the highest increases include the Florida Keys (24%), followed by Myrtle Beach, SC, (22%) and Miami (20%).
Resort fees, which are imposed by hotels in addition to the basic room rate, are usually mandatory, although sometimes optional, and are usually charged by larger resort-type hotels. Resort fees typically include perks such as access to hotel amenities (internet, spa and fitness center, hotel pool and pool amenities) or complimentary drinks, newspapers, coffee and more.
Resort fees have been a common complaint of hotel guests since the Federal Trade Commission (FTC) instituted a policy on hotel fees in 2012. The FTC policy allows hotels to add mandatory fees to their room rates if the surcharges are disclosed before the room is booked. Under the current guidelines, hotels are permitted to quote a low initial room rate online and add the mandatory fees later in the process, which some consumer advocates argue is deceptive.
But trade show attendees and consumers could see changes in the near future. The Washington Post and Huffington Post are reporting that the FTC “is poised to announce a policy shift that would require resort fees to be included in the initial price quote.” The FTC did not respond to TSE’s request for comment or clarification.
If the FTC doesn’t change its policy, new legislation might address this issue. In February, Missouri Senator Claire McCaskill introduced a bill that would prohibit hotels from charging hidden resort fees. The legislation would require hotels to disclose and include the full cost of a traveler’s stay in their room rate.
“This is an FTC issue,” said Greencorn. “We need resort and other mandatory fees disclosed up front so that consumers are not tricked into a lower price. Consumers have the right to know the full costs when booking a hotel room.”
The American Hotel & Lodging Association (AHLA) maintains that the hotel industry follows current guidelines and provides guests full disclosure for mandatory resort fees charged up front. “Transparency and guest satisfaction are at the core of the industry’s business model,” said Rosanna Maietta, Senior Vice President of Communications and Public Relations for AHLA. “Making sure guests have all the necessary information prior to booking their room is paramount.”
According to an AHLA Fact Sheet on Mandatory Resort Feeds: “When consumers book directly with the hotel, either on the hotel’s website or through the reservation phone line, all fees, including any resort fees that are included, are displayed.” AHLA contends some consumer confusion exists in the booking process with online travel agencies and their display of price and fees, which often is lumped together.
The real reason hotels charge resort fees is to increase hotel revenue, said Greencorn. “Hotels want their rates to appear low while increasing their top line. Rather than increase room rates, they make rates appear low while tacking on a back-end fee. To use an analogy, imagine showing up at the airport for a flight, only to be told there was a mandatory fee for in-flight pretzels and soda -- whether you wanted them or not. Resort fees work in the same way.”
Despite the 8% increase in the first half of 2016, AHLA reports that resort fees have steadily declined over the past decade. Only 7% of 53,000 hotels charged mandatory resort fees in 2014, according to the 2014 Lodging Study Hotel Trends (conducted every two years) by STR.
In addition, AHLA reports that 80% of consumers are willing to pay for mandatory resort fees. A majority of guests (55%) who have stayed at hotels with mandatory resort fees prefer the hotels’ current method of having the hotel break out the fee separately from the room price, according to a poll by Axis Research (April 2016).
“We simply need more transparency,” said Greencorn. “Whether it’s a resort fee or any other mandatory fee, consumers need to know the costs up front at the time of booking. Right now, that simply is not happening. Resort fees do nothing but make room rates look cheaper than they actually are.”
While it’s unclear at this time whether the FTC will change its current policy or whether proposed legislation will be voted on or passed, there’s no doubt that this is an issue that impacts the exhibition industry. Stay tuned for updates as they develop.
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