Hotels Believe Customers Appreciate Resort Fees? Really?
Resort fees started out as a nuisance in markets like Las Vegas and have grown into their own beast. Vegas is a great example of a market where resort fees are clearly out of control. There are plenty of instances in Las Vegas where the resort fee can be as much or more than the room rate. Customers are frequently surprised by the resort fee when they check-in at hotels, especially if they’re not paying enough attention during the booking process.
Recently, Booking.com made a change that caused a stir in the hotel industry. The online travel agency started charging a commission on the resort fees hotels charge. The current industry trend is that online travel agencies only charge a commission on the base nightly rate. When resort fees were first becoming popular with hotels, they didn’t represent a big portion of the room rate nor were they widespread. Today, they are bigger and much more prevalent.
A recent Skift article addresses the change that Booking.com instituted and also quotes an Expedia executive, Cyril Ranque in regards to that company’s plans on resort fees:
He said Expedia has not changed anything about its commission collection policies, and pointed out, “we are hearing, despair, high concerns from our hotel partners. We’re trying to get as much information as we can.”
Ranque goes on to offer an opinion on resort fees and how customers perceive them, stating something that seems pretty obvious:
“They think they had a price,” he said. “They book it and then all of a sudden they get hit by a series of fees that the customer has no choice in paying. So that’s why when we really think about the health of the travel agency business, it’s not really good to not tell the customers in a clear way.”
Not Everyone Hates Resort Fees
I think you’d be hard pressed to find too many folks who think customers like resort fees. Thanks to the good folks at Skift for reaching out to Vijay Dandapani, the CEO of the Hotel Association of New York City. Vijay has a contrary view to the opinion that resort fees are a customer annoyance:
“Resort and urban fees provide real tangible value to the guest and there is plenty of empirical evidence that a majority of guests have no problem with it, and appreciate the value offered,” Dandapani said. “Booking’s adding a commission to that is akin to tacking on a charge on to a range of other products and services guests consume at a hotel after checking in, and will only increase the cost to the consumer while unfairly penalizing the largest customer base: hotels.”
Well, then. I can’t really imagine how rational minds could agree with this statement. It wouldn’t shock me if the evidence he cites to prove that a majority of guests have no problem with resort fees is the fact that customers pay resort fees. They’re required to pay them. No choice in the matter.
As to the real tangible value of resort fees, they’re mostly comprised of benefits some hotels have always given away for free (airport shuttle, newspaper, bottled water). Many hotels make a habit of including throw-away items that they’d otherwise be providing to justify a resort fee. Still other hotels don’t even bother justifying the fee, just lumping it on top of the room rate with little or no explanation.
The Final Two Pennies
Mr. Dandapani and I do see eye to eye on one thing. He describes Booking’s decision to charge commission on resort fees as a move that “will only increase the cost to the consumer”. As I said a couple weeks ago, I don’t agree with some of the folks who think that Booking’s move might be a catalyst for hotels to start eliminating resort fees. Rather, I think it’s quite possible that hotels pass on the commission as additional expense to customers.
Wonder where they’ll end up baking it in? The resort fee, of course.
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Hotel resort fees are the Fuel / Carrier Surcharges of the hospitality industry. Same commercial logic, same bottom line impact, same resentment by customers.
Sadly, my feeling tells me also same persistence as fuel surcharges….
From a customer experience point of view they are quite different though. When I search for flights (let’s not talk about award bookings) I always see the final amount that I am paying out of pocket, and I can compare between options fairly. You want to charge me more surcharges? Fine I wouldn’t know. It’s just a part of the number not my concern. But for hotels, you give me a price, and then when I am ready to confirm it suddenly gets 50% more expensive, and you tell me it’s for services that I don’t even need? Seriously?
Tony, that’s the big rub. You can’t figure out what the price is easily to compare.
I really don’t blame Booking.com for charging commission on the resort fees as it was a method used by hotels, inter alia, to deprive agencies of their full commission on the booking.
They will continue to be commonplace in the USA until such time as the US requires them to be included in the price displayed.
NB, I don’t blame Booking, either. Just don’t agree with them positioning it as some attempt to help customers.
The only thing that will fix this at this point is a legislative fix. Truth in pricing just like the airline industry. It’s the right thing to do.
Chris, I tend to agree. Without a legislative mandate, I don’t believe we see a substantial improvement in resort fees.
Anyone who can say with a straight face that resort fees are credible should have a hard time looking at him or herself in the mirror. Snake oil salesman.
+1. Also, I’d much rather have a slightly higher true price than an unknown fake price.
Christian, where this can really be a pet peeve is markets where some properties do charge a resort fee and some don’t. It’s impossible to compare numbers easily on an OTA.
Well put, Paul.
Would like to learn if there are any quality resorts that travelers love, that do NOT charge resort fees? This might be like searching for a needle in the haystack, however, if travelers support these “no fee” resorts, maybe the others will think about making some changes,
Jay, ultimately I think occupancy across the industry is too high right now to see a difference between resorts.
“Booking’s adding a commission to that is akin to tacking on a charge on to a range of other products and services guests consume at a hotel after checking in.”
Dandapani is comparing resort fees, which are a required part of the booking, to products and services that are not required. Seems like a non sequitur to me.
Charlie, agree it’s a non sequitur.