The industry is divided over resort fees

After the Biden administration put mandatory resort fees firmly in its crosshairs this year, different facets of the hospitality industry found themselves at odds, with some defending the fees and others saying they need to go.

Robert Cole, Phocuswright’s senior research analyst for lodging and leisure travel, is among those who say the hospitality fee landscape is long overdue for an overhaul.

“The case that the hotel industry has made for resort fees is pretty weak,” he said. “And the bottom line is that consumers need to understand the total price when they’re buying something.”

During his State of the Union address in February, President Biden criticized not only “surprise resort fees” but surcharges related to cable, Internet and cellphone service; concerts and sporting events; and airfares in his plans for the Junk Fee Prevention Act. The legislation’s specifics have yet to be released.

Several trade groups immediately jumped to the defense of resort fees. The American Hotel and Lodging Association said it would work with the administration, Federal Trade Commission and lawmakers “to ensure a level playing field around transparency for mandatory fees,” but it added that the fees “provide guests with value and include various unique goods and services at each property that charges them.”

The AHLA reports that only 6% of hotels nationwide charge a mandatory resort, destination or amenity fee, at an average of $26 per night, according to a 2022 OTA analysis.

Alex Costello, the American Gaming Association’s (AGA) vice president of government relations, similarly defended the fees, which are charged by many of the group’s casino resort members on the Las Vegas Strip, saying that it is important to distinguish between what the administration calls “junk fees” and resort fees, which provide customer value and “distinguish resorts from a standard motel, hotel” and may include a pool, gym or concierge service.

“The way that the administration and FTC have defined junk fees is something that provides no value and that is hidden from the consumer,” Costello said. “Our resorts are very forthcoming with those fees.”

It is not entirely clear from Biden’s remarks whether the administration plans to mandate that resort fees be part of the advertised price or allow them to be separate if they are transparently disclosed early in the booking process.

Costello said it is not clear if the government has the ability to do this and if it would come from a regulatory FTC action. “There have been a lot of questions raised on how much they can control pricing in an open market,” she said. 

And as far as the AGA is concerned, this issue was addressed in 2012 when the FTC put out guidelines about online advertising and pricing. In the AGA’s response to the current uproar, Costello said, “We sort of posit this as fixing a problem that doesn’t exist. The FTC has already addressed this issue. We don’t believe that further regulation is necessary.” 

Going after drip pricing

Lauren Wolfe, founder of the anti-resort-fee website KillResortFees.com and an attorney for the consumer advocacy nonprofit Travelers United, disagrees. 

“Most consumer advocates are of the opinion that we need to eliminate drip pricing,” said Wolfe. “If a fee is mandatory, it has to be included in the advertised price.”

Within hospitality, drip pricing generally refers to the practice of obscuring extra fees until the conclusion of the booking process, resulting in a final price that can differ substantially from the original advertised amount.

Phocuswright’s Cole said that disclosing the fee early on doesn’t eliminate the drip pricing issue.

“Sometimes you’ll see that it’s $320 a night and there will also be some little text saying that there’s a $30 fee per night,” Cole said. “But it doesn’t do the math for you. You still have to go to the next page to see the full price.”

ASTA has also come out against the strategy.

“We believe hidden hotel resort fees violate principle of transparency and that public sentiment is with us on this issue,” said Eben Peck, ASTA’s executive vice president for advocacy. “We support any initiatives to ensure that consumers are shown the full, pretax price of a hotel room while searching and comparing lodging options for their next trip — hopefully with the assistance of an ASTA-member travel advisor.”

Resort fees have expanded

FTC pressure appears to have done little to deter the expansion of resort fees.

Randy Greencorn, founder of the resort fee-tracking website ResortFee-Checker.com, reports that the number of U.S. properties charging a resort fee grew by 17% over the past year, with much of the increase coming in urban markets like Chicago and Boston.

“I expect resort fees in these cities to become more prevalent,” said Greencorn. “Once a few hotels start charging a resort fee, others in the same region typically follow suit.”

And in contrast with what defenders of resort fees say, Wolfe contends that it is no longer just sprawling, amenity-rich resorts that tack on these fees. 

“Resort fees started at properties that were actual resorts, but now we’re seeing them at hotels across virtually every major American city,” she said. “So the argument that you’re paying for resort amenities with these fees is out the window. And the pandemic also took away [that argument]. Because hotels would say, ‘Oh, the resort fee pays for the pool, and it pays for the gym,’ and then they would shut down the pool, shut down the gym, but they’d still charge the resort fee.”

Johanna Jainchill contributed to this report.

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