Hotel companies around the United States charge fees or have add-ons that guests pay without really knowing how much they are charged. In gambling areas such as Las Vegas, casino resorts use many tactics to hide charges that visitors pay. A new bill may change all that. A measure is currently being considered in Congress that will make hotel companies provide information on the resort fees and other charges they have in place on top of the daily room rate.
This would be a huge change that affects resort operators in Las Vegas as well as other gambling areas like Atlantic City. The bill was introduced by two congressmen, one from Texas and one from Nebraska, with support from both sides of the aisle.
Details of the Bill
The bill was created as a response to the practice of the hotel industry regarding adding resort fees to the room bill. Such fees are said to cover the cost of Wi-Fi, fitness centers, room safes and other incidentals and/or amenities.
Resort fees have been a hot topic in Las Vegas as there is a fear that the added costs will push visitors to travel elsewhere. Hotels are charging from $15 to $45 a night extra per stay. If the legislation were to come to pass, it would affect such operators as MGM Resorts International and Caesars Entertainment.
Already, hotel companies are facing lawsuits involving resort fees and not disclosing the cost to guests. The Marriott International and Hilton Hotels are listed in lawsuits where Attorney’s Generals are suing the company for such fees.
Thomas Allen, a gaming analyst for Morgan Stanley, commented on legal action against resort companies by stating that the lawsuit filed against these companies is asking for the brands to advertise the fees upfront and pay money to consumers who have been harmed by the fees as well as pay civil penalties.
If the resort fees were included in upfront pricing, it is believed that overall revenues would be impacted. The resort fees accrue around 3% of revenues for MGM Resorts and Caesars and account for around 10% of cash flow for the companies, according to Allen in a report by CDCGamingReports.
The Travel Company Component
The bill being considered also affects the travel industry by way of travel agencies. Right now, travel agencies who book for hotel brands earn a commission based on the hotel room rate. They are not given a piece of the additional fees charged by the resort at the end of the stay.
Online travel agencies reportedly create from 20 to 25 percent of hotel rooms that are booked by the 18 resorts located on the Las Vegas Strip by Caesars and MGM. The agencies could see a huge influx in commission amounts if the fees must be listed in the nightly amount. Reports indicate that as much as $15 million could be generated in additional money for travel agencies if all charges are listed from the beginning.
Analysts have mixed opinions when it comes to what will happen with this new bill regarding hotel fees. It is expected that it will be discussed heavily as it asks the question as to whether or not the disclosure of the resort fee is fair since it is a mandatory charge that is not always apparent when it comes to the rate as it is advertised.