Mandatory resort fees swindle travelers and travel agents alike
Nobody likes mandatory resort fees. Except hotels. Hotels love mandatory resort fees.
The obvious reason is that resort fees are a way to pad rates on each and every room, even if a traveler does nothing more than sleep in a bed at night. And since resort fees don’t show up in initial rate searches, resort fees also make a room look less expensive than it is. It is a form of false advertising.
In some cases for midweek stays in Las Vegas, I’ve seen deceptive resort fees basically equal the room rate.
Now, it’s possible that growing consumer anger may lead to hotels being required to quote mandatory resort fees as part of the advertised rate. But as long as room rates and mandatory fees are technically separate charges, the hotels will get away with their other objective, which is — not surprisingly — making more money from each booking. Note: Airlines have been required to publish all mandatory fees with airfares by the Department of Transportation for years.
While outsiders might wonder why it matters, corporate travel managers and travel agents know the game all too well. Mandatory resort fees are neither discountable nor commissionable.
These days, there can be as many rates for a hotel room as for an airline seat. But, in general, hotels try to sell as many rooms as possible at “rack” or “published” rates.
Some chains, Marriott for example, give a five percent discount off many rates to members of their frequent stay programs. And corporations who do volume with a given hotel or chain often can negotiate a percentage discount off regular rates. But generally, those discounts are off the base rate, before tax and resort fee. And, with resort fees of $20-$50 a night these days, not discounting a separate fee can mean extra dollars on the bottom line for hotels per night.
Travel agents and tour operators are in similar situations. While airlines usually don’t pay commission any more, most hotels do pay. The commission is built into the rate travelers see, but again, it is only the base rate that is commissionable. In general, with travel agents the rate is eight to ten percent, but it can be much higher with a wholesale tour operator who markets the hotel. Again, in almost all cases, properties keep the entire mandatory resort fee for themselves.
Airlines who do pay commission to some agents and tour operators play the same game — the mandatory “fuel surcharge” on many tickets, especially international tickets that are nondiscountable and noncommissionable. Finally, cruise lines usually include significant “NCFs” (literally “non-commissionable fees”) in their rates.
It seems, not surprisingly, that travel companies need to make money. However, travelers and travel agents would all be happier if the hotels were a little more honest about it.