Why Hotels Charge Resort Fees & Overall Cost Over Time
As a local, every once in awhile I log into my Mlife account and check out room rates. Some times I make a staycation out of a cheap rate for Hyatt credit and at the end of the year I have also done a mattress run or two to get Hyatt nights. Thankfully with the new Hyatt credit card that shouldn’t be necessary because I can spend my way to earn extra nights.
Resort Fee Double the Room Rate?
This morning I was just looking at the Mlife site for fun and noticed something interesting. Look at the price for Excalibur and notice the resort fee price below.
That’s right! The room rate is less than half of the resort fee. I’ll tell you why a little later, but for now let’s look at how Mlife’s increase in resort fees has affected the overall cost of a room.
While many people including myself hate resort fees there is one way to make sure you are getting the best deal. Simply calculate your overall cost. When I saw this number, it got me curious as to how much overall rates at Excalibur have increased. It’s pretty interesting and surprising.
Comparing Three Stays Over Time
Back in December, 2015 I “stayed” at the Excalibur in order to gain Hyatt credit for then Diamond status. Here are the numbers relating to that stay. I should note that the $21.75 room rate is the LOWEST I had seen all year for the property. I’m not sure if the $16.49 is the lowest all year as of now, but it can’t get much lower.
As you can see my overall cost was $53.48. Unfortunately taxes have increased to 13.4% so to make the numbers equivalent, that would be $54.15. Now let’s look at how much that $16.49 rate costs with all of the taxes and fees built in.
Finally, let’s take this example as cited in the Las Vegas Sun in 2010. I should note that sometime that year the resort fee jumped to $9.95, but for this example the person paid a $39 rate and a $4.50 resort fee. I’ll use the 13.4% tax rate to keep the numbers even.
So let’s break down the total cost of these 3 stays:
- 2010 Total: $49.33 ($57.01 in 2018 dollars)
- 2015 Total: $54.15 ($57.57 in 2018 dollars)
- 2018 Total: $58.38
- Total Increase from 2010 (no inflation): $9.05
- Increase %: 15.51%
Note that when we factor in for inflation the overall cost has only increased 2.34%. Considering the 2010 example might not be the cheapest overall room, I would say it’s fairly safe to say unscientifically that rates are relatively flat over that period.
Resort Fee Breakdown
Now let’s look at the resort fees over the years:
- 2010 Resort Fee: $4.50
- 2015 Resort Fee: $26
- 2018 Resort Fee: $35
- Total Increase (no inflation): $30.50
- Increase %: 87.14%
As you can see the overall cost of the room without factoring for inflation has increased only 15.51% since 2010, however the resort fee has increased 677%! While the rate dropped from $39 to $16.49, the resort fee jumped from $4.50 to $35. But why?
Why Hotels Charge Resort Fees
Why do hotels charge resort fees? It’s simple. Resort fees are a way for companies to avoid paying commissions. When someone books a room through an online travel agent like Priceline or Expedia or a regular travel agent, the hotel company (in this case MGM Resorts) has to pay a commission. You know what they don’t pay a commission on? Resort fees!
In most cases resort fees go directly to the company’s bottom line and they don’t have to share that revenue with anyone. This is why the $4.50 resort fee Excalibur charged in 2010 is now $35 today. A pretty crazy increase, but they also weren’t charging $16.49 for a room back then.
While my study wasn’t an exhaustive one, over time it indicates that the overall cost of a room has only increased slightly while the resort fees have gone through the roof. While these types of numbers will vary by property, in this case consumers aren’t actually paying much more than they would have otherwise. Does that make it feel any better? NO! Resort fees are still confusing and consumer unfriendly, but it looks like they are here to stay.
What are your thoughts on Vegas resort fees or resort fees in general? Do the numbers surprise you?