Will Resort Fees Sleep With The Fishes?
So now Booking.com wants to get a taste of the resort fees and they are claiming they are doing it for the benefit of the customer and not for the millions in incremental revenue that it will net them. Their public comment was that they are trying to be “transparent,” and to anyone who has been around long enough it is easy to see they are being very, very transparent (tongue firmly in cheek). The reality of it is that most OTA’s have done a fine job of disclosing resort fees during the booking process and by the way, where is this “transparency” when they are touting “Free Cancellation” or when they are sourcing inventory from unscrupulous third parties?
OK, maybe I am being a bit harsh on Booking, but let’s call it what it is, they want their vig*, and they are going about it in a very clever way. Resort fees are extremely unpopular and by positioning it as “anti-resort fee” or "transparency" effort, instead of the cash grab it is, will likely play well, in fact a recent headline proclaimed “Booking.com is cracking down on resort fees.” Fake news?
The brilliance of this is that Booking.com has chosen something that most hotels will have a hard time defending because, let’s face it, resort fees suck for consumers.
Those of us who have been in the industry a while likely remember quite vividly the arguments for and against resort fees. Many, in fact most marketing folks, were dead-set against implementing resort fees as we felt it was a poor customer experience, difficult to justify, and we did not want to devolve into the airlines who were perceived to be nickel and diming the customer to death while further commoditizing their product. On the others side of the equation were the CFO's, spread sheet in hand, showing how much incremental revenue could be added, and what made it even more appealing was that hotels could avoid paying commission on it and in some instances avoid certain taxes, as in some jurisdictions the fee is not taxed the same way room rates are which meant, fees, in some case, are better than an increase in ADR (average daily rate). RockCheetah's Robert Cole jokes that the way the economics work it would be better for Hotels to charge a $10 room rate with $100 Resort Fee. (Whether by design or not I have seen this actually happen in Las Vegas, where one hotel had a $30 room rate with a $32 resort fee).
Some hotels decided to try the Southwest Airlines approach and position not having a resort fee as a USP (unique selling proposition). These hotels went out to the market and shouted from the proverbial roof tops, “NO RESORT FEES,” unfortunately the market did not respond. Their competition was getting rate + resort fee and those who did not implement the resort fees were only getting rate, with any incremental bookings from the messaging not making up the difference. When the no-resort-fee hotels increased rate to try and get closer to the competitions total rate (but still under) they were punished by OTA’s and meta as the “cheaper” rates showed much higher in the rate display. For those of us pushing back on the fees all the data points were against us and resistance was futile, there was no apparent benefit to not charging a resort fee, and worst of all we had to endure the ignominy of the CFO’s, armed with their spread sheets, telling us “I told you so.”
Resorts made the case that they had many “inclusions” that made the resort fee a great deal, many resorts beefed up the inclusions to give it more perceived value, a typical resort fee “package” may include; wi-fi, welcome drink, discounts at F&B outlets, access to bicycle or other "toys", use of certain facilities, etc. While some guests complained, most just paid the fees and the resort fee became the norm. Not to miss out on this, city hotels saw what was going on and decided that they too should collect resort fees, but alas they are not resorts so they came up with clever names like “Urban Retreat Fee.” I recall staying at a boutique hotel in San Francisco that charged a $35 a night “Urban Retreat Fee” with amazing inclusions like; Coffee Machine In Room (if available), Bucket of Ice (Please Call Room Service) along with other basic items like use of the gym. In many hotels this fee has essentially become another “tax” on the guest.
In some cases resort fees do have value and should be separated from rate but unless hotels truly unbundle and allow guests to add on options (like airlines), as much as it pains me to say it, Booking.com is right, but for the wrong reason.
* For those who did not grow up in Brooklyn during a certain era or are not a fan of mob movies the vig (vigorish) is the % paid on a loan or winnings, usually at very high rates.