Resort Fees

Last year, U.S. hotels collected a stunning $1.8 billion in surcharges and fees, according to a recent study. And a significant portion of that sum came from resort fees, the daily charges imposed by hotels to cover amenities like gym access, Internet use and daily newspapers, according to the survey's author, Dr. Bjorn Hanson, divisional dean at the Preston Robert Tisch Center for Hospitality, Tourism, and Sports at New York University.

The total might be startling, but the fact that hotels and resorts are levying such fees at a dizzying pace surprises few meeting planners. More than half of the 144 respondents to a recent M&C Research poll said resort fees have become more prevalent in the past year. (For full survey results, click here)

And more will join the bandwagon this year, Hanson predicts, as hotel executives scramble for ways to boost revenues when there is so much pressure on room rates. Such fees and surcharges emerged as an industry practice circa 1997 (in some cases as an "amenities tariff"), says Hanson, and they have grown every year except for periods after 2001 and 2008, when lodging demand declined. Resort fees typically fall between $15 and $25, but they can be as high as $60 in some high-end venues.

Now, even properties that can't be considered resorts are tacking on the extra charge. "These hotels might have a golf course or just a larger than normal fitness center and charge resort fees," notes Hanson. In a few cases, he says, properties are charging fees per person, rather than per room. This can add up when attendees share rooms or bring a spouse or guest.

Meeting professionals are understanding -- up to a point. "Just like airlines, everybody is trying to get as much revenue today as they can," says Mimi Almeida, an independent planner based in Walnut Creek, Calif. "I don't blame hotels for charging resort fees, but it is up to us to get the most value we can obtain for our groups."

However, she and other planners take exception to five-star properties charging a resort fee for items that traditionally have been complimentary, such as nightly turndown service. And they want to negotiate, particularly when the fee covers services attendees won't have the opportunity to use.

And planners get cranky when hotels won't budge. In fact, 44 percent of those polled by M&C are less likely to book a hotel or resort that refuses to reduce or eliminate resort fees for their groups.

To fee or not to feeIt's not surprising that most major hotel chains and individual properties contacted for this story declined to comment on this controversial topic. On the other hand, those that have taken a stance against ancillary fees are very happy to talk. Caesars Entertainment, for one, openly eschews the concept of resort fees and does not impose them at its eight Las Vegas properties (including Caesars Palace, Planet Hollywood, Harrah's and Bally's). The no-fee policy is a cornerstone of the company's selling strategy to the meetings market, says Michael Massari, senior vice president, Caesars Entertainment.

"We are in the hospitality business, not in the business of bucketing things up and charging planners for things they may or may not use," says Massari. "I believe our job is to identify what our customers want and deliver that. We never charged resort fees in the Vegas market. We just became more public about it recently." Instead of all-encompassing fees, Massari explains, Caesars properties give planners the option of choosing the services they'll use. "Some of them are value-added, some come for a fee, but the key is someone isn't deciding for you which ones you will get."

Given the lucrative revenues resort fees generate, Massari admits that failing to impose them is a hard business decision for properties to make, but "for us, resort fees are too big a dissatisfier. They are not hospitable and they are not transparent." Caesars' research, adds Massari, shows that overall customer loyalty and satisfaction have increased as a result of the policy.

For many hotel companies whose individual properties make such decisions, it's more complicated. "There's no consistency, even within the same brand," says Nikki Nestor, president and CEO of Carlsbad, Calif.-based World Class Travel by Invitation. The amount charged -- and what it covers -- can vary widely.

At Marriott, just 30 resorts in the company's global portfolio of 3,600 properties charge a resort fee, says a spokesperson, and those are in locations where such charges are the norm. The fees, which vary by property, can cover services such as parking, phone calls, use of the fitness center, bottled water, beach chair service, shuttles, guided hikes, driving range access and Internet service.

At Joie de Vivre Hotels, which has a portfolio of 30 boutique properties and resorts chiefly in California, only three hotels charge resort fees. "It's up to the property to decide if there will be a fee," says a spokesperson. At the chain's Saguaro Palm Springs (Calif.), which opened last month in a leisure destination, resort fees are $18 per room, per day, and include parking, Wi-Fi, yoga, access to the exercise room, local phone calls, pool service and towels. "We will be flexible on this with groups, depending on size and time of year," says Joseph Jenci, director of sales.

At the 60-room Ventana Inn and Spa, a Joie de Vivre property in Big Sur, Calif., the resort fee is $28 per day and includes morning yoga, a guided property hike, a hosted wine and cheese reception, and shuttle service to local shops and restaurants. Fees are extremely important to the property's overall revenue base, says sales manager Francisco Carrasco. However, he adds, he is "somewhat flexible" about negotiating or eliminating them for meetings or incentives -- particularly if the business brings "high group room rates and a large number of room nights." (For more insight, click here.)

Value proposition Hoteliers who charge resort fees argue that they're not only sound business decisions for the property, but they add value for the planner. Lindsay D. Curry, director of sales for the 236-room Enchantment Resort in Sedona, Ariz., and the 106-room The Tides Inn in Irvington, Va., makes a compelling case. "Due to the nature of our destinations, it is difficult to find guests who are strictly visiting on business, with no intention of taking advantage of the amenities the resort fee covers," she notes. At the same time, she demonstrates how the fees represent substantial savings over what these services would cost if purchased individually. Resort fees -- $25 at Enchantment and $24 at The Tides -- include the following:

• Evening turndown service with a bottle of water for each guest (estimated retail value, per Curry: $17-$22);

• Morning newspaper delivery to room with fresh chilled orange juice (retail value, $4.50-$6.50);

• Access to spa and fitness facilities and resort amenities such as tennis, golf, etc. (retail value, $10-$25);

• High-speed Internet access in guest rooms (retail value, $12);

• Participation in all scheduled resort activities, including wine tastings, cooking demonstrations, art classes and guided tours (retail value, $15-$45), and

• Parking (retail value, $10).

"Overall, I feel the resort fee is better than hitting guests for every charge associated within the fee," Curry says.

 As planners see it Many planners would agree that the surcharges can provide good value. "In many cases, these fees are helpful," says planner Mimi Almeida. "You don't want to be nickled and dimed at every turn, and you don't want attendees always reaching into their own pockets for things like bottled water in their rooms."

"I don't get upset over them," adds Nikki Nestor. "They are a reality and a way of covering legitimate costs."

Small groups that meet in high-end properties tend to be more open to paying the fees, observes Amy Durocher, director of global accounts for site-selection firm Global Synergies in Scottsdale, Ariz. Yet, larger groups often balk at the charges, she says. Because of the volume of their business, they think they should get a break.

What many planners do take issue with is properties that won't budge on the dollar amount, even when the group is bringing in a substantial piece of business. Worse, they say, is when the charges include amenities their attendees won't be able to take advantage of. Says Almeida, "Nothing is more annoying than getting a bill for services that you didn't use."

Nikki Nestor agrees. "I have a problem paying a resort fee if my group is in Las Vegas for a heavy training meeting," she says. "The attendees are in sessions all day and have no time for things like the pool or spa, and at night they are out on the Strip, and not in the host hotel."

Another problem area for resort fees is disclosure. Planners want to know at the outset if there is a charge and what it includes. Amy Durocher asks about fees as early as the request-for-proposal stage of her selection process. "I've never had the experience of a property trying to be sneaky about resort fees -- they tend to be up-front," she says.

NYU's Bjorn Hanson agrees that hotels are more transparent today and typically disclose fees to both planners and independent guests in a forthright manner -- during negotiations, on websites, and with tented signs and notices in guest rooms. But not all properties are so forthcoming. Planners should be on the lookout for contract clauses that state "all customary charges and fees apply," says Hanson. That's a red flag that requires a detailed explanation and discussion, along with more specific contract language about those charges and fees.
 

Exceptions are the rule Fortunately, many planners report that it is possible to get some relief on fees. A surprising 70 percent of professionals polled by M&C have been successful in having the charges removed, and 84 percent have been able to get them reduced.

And hoteliers, for the most part, say they are willing to consider cutting or tweaking resort fees. Among the factors they weigh: group size, number of room nights, the season during which the meeting will take place and the agreed-upon room rate.

Planners who have negotiated resort fees down or away say the key is to ask as early in the negotiation process as possible and, if fees aren't eliminated, trying to get additional value or perks packaged into the price.

"We generally are successful in having the charges removed," says Deborah K. Gaffney, director of conference planning at the Washington, D.C.-based Tax Executives Institute. "But occasionally, when we are at the sort of resort where there is plenty of demand, we will acquiesce because the desirability of the location for a particular meeting outweighs the pesky fee." In those cases, she will ask that the fee also cover something else the group needs, such as unlimited in-room Internet access.

"Just be sure that what they offer you is something your group will truly use," stresses Mimi Almeida.

Almeida was able to successfully negotiate a $25 charge down to $10 at a Lake Tahoe resort after pointing out that her attendees would not use many of the amenities included in the fee, such as free gondola rides into the village. "I told them we only needed in-room Internet access and the gym," she says. "It's all about knowing what your group needs."

Almeida advises planners to ask plenty of detailed questions when evaluating the amenities covered by resort fees. For example, she found out the gondola at Lake Tahoe didn't operate on Sundays, and that was the only day most of her attendees would have had a chance to use it. "Take nothing for granted," says Almeida. "Have everything explained and spelled out before signing the contract." 

A Hotelier's Point of View

Few hoteliers are willing to discuss resort fees on the record, but Brian Gipson, director of sales at the 139-suite Carmel Valley Ranch in California, a Joie de Vivre resort, recently explained his property's policies in an interview with M&C.

Does the Carmel Valley Ranch charge a resort fee?
Yes; the cost is $25 per room, per day.

What amenities are covered in the fee? 
Gratuities for bell staff, doormen and maids; in-suite and public area wireless Internet access; unlimited business center usage; admission to any of the 50 to 70 fitness and other classes weekly, including The Bee Experience -- a beekeeping class -- organic garden tours and guided hikes; fireside s'mores every night; parking; in-room bottled water, replenished twice daily; an in-room snack basket with trail mix, sports bars and fresh fruit; coffee makers; a daily New York Times; a DVD library and Blu-ray players in all suites, and access to the River Ranch activity areas that include two pools and two hot tubs.

How flexible are salespeople allowed to be with respect to resort fees for meetings or incentive groups?
Everything is up for negotiation, but we culturally do not like to waive the fee. If we do waive it, then we need to charge for porterage and maids' gratuities and Internet usage, so it really isn't a value to go without the daily fees.

Do planners generally accept the fees, or do they complain about them in negotiations?  
Once we explain the overall value to them of all amenities covered in the fee, 99 percent of the time it becomes a non-issue. The value really is very strong.

Would you consider lowering or eliminating resort fees to win group business?
Of course we would consider doing so, depending on the needs of the property and the seasonality of the program.

How important are resort fees to overall revenue base?
The resort fee is more to cover costs of the experiences we deliver to the guests, whether on a program or there for leisure. Everyone drinks water, uses the Internet, needs to tip the maids and bell staff. We do not look at it as a revenue generator but more as a fee to cover the significant costs of the extra value we offer.