Uber and Maverick for CES

Uber and Maverick for CES

L.E. Baskow

A view of the Las Vegas Strip from a helicopter on Thursday, Jan. 5, 2017.

Democrats in Nevada’s congressional delegation say they support President Joe Biden’s bid to outlaw so-called “junk fees” that can translate into higher costs for American consumers.

But they draw an important distinction for Nevada’s tourism industry: Resort operators on the Las Vegas Strip and elsewhere in Nevada make full disclosure of pricing for their services, including daily resort fees that are added to the cost of a room.

During his State of the Union address Tuesday before a joint session of Congress, Biden announced proposed legislation called the Junk Fee Prevention Act, aimed at banning surprise charges ranging from overdraft fees to undisclosed costs when purchasing airline and concert tickets. The move, the president said, is intended to protect consumers on the coattails of months of record inflation. The bill, he said, would save families “thousands” each year.

“I know how unfair it feels when a company overcharges you and gets away with it — not anymore,” Biden said. “We’re going to ban surprise resort fees that hotels charge on your bill. Those fees can cost you up to $90 a night at hotels that aren’t even resorts.”

Such an aggressive move may go a long way in providing transparency for consumers, but the Nevada Democratic lawmakers — all staunch allies of Biden — don’t want the legislation to harm the state’s golden goose.

“I’m sure the president knows, Las Vegas resorts really are resorts,” Nevada U.S. Rep. Dina Titus said in a statement. “I commend and share President Biden’s view that customers need to be protected from exorbitant ‘junk fees,’ and I applaud efforts by the FTC and hotel operators to ensure transparency in pricing.”

In a separate statement, Nevada U.S. Sen. Catherine Cortez Masto said Congress was serious about creating transparency in billing and pricing for corporations like Ticketmaster, but she and other colleagues will protect Nevada resort operators.

“I’ll make sure this administration’s proposals stay focused on eliminating surprise fees,” Cortez Masto said in the statement. “Not punishing our world-class hotels and casinos for charges they already disclose up front.”

A spokesperson for Nevada’s junior U.S. Sen. Jacky Rosen said Rosen supported “strong consumer protections against problematic hidden junk fees while also understanding that many resorts do rely on fair and transparent charges.

What are resort fees?

Resort fees are defined by the Federal Trade Commission as “per-room, per-night, mandatory” charges levied by some high-end resorts and certain hotels for amenities like high-speed internet, or use of spas or fitness centers.

In 2018, resorts and hotels raked in $2.9 billion in resort fees, according to a report from New York University.

That number likely took a nosedive during the pandemic, said Anthony Lucas, a professor in UNLV’s William F. Harrah College of Hospitality, but as tourism numbers have largely overtaken pre-pandemic levels, it’s likely revenue generated by resort fees have also eclipsed figures set before 2020.

And should the Biden administration crack down on resort fees, many Las Vegas-based resort operators like MGM Resorts International, Caesars Entertainment and others could stand to take a big hit to their bottom line, Lucas said. But he also added that such operators would likely raise room rates or increase costs in other areas to offset any potential losses brought by new regulations.

“They’re not very likely to take a 3 to 10% haircut for nothing,” Lucas said. “They’re going to at least chip away a good portion of that by increasing the (room) rate. Those are legitimate costs that they’re going to have to recoup one way or another.”

Tuesday wasn’t the first time the president has taken aim at junk fees either. In remarks Oct. 26, Biden specifically criticized resort fees, airline rebooking fees and concert ticket processing fees.

He argued that amid record inflation such hidden costs cause an undue burden on consumers and collectively add up to “billions of dollars in unfair fees.” Biden reframed the argument Tuesday, talking about how charges such as service fees for tickets to concerts or sporting events, surprise resort fees and airlines charging extra for families to sit together on a flight are costly and unwarranted.

“They’re unfair, and they hit marginalized Americans the hardest, especially low-income folks and people of color,” Biden said of the “junk” fees in October. “They benefit big corporations, not consumers, not working families.”

But as of now, the Biden administration has only stated its desire to go after “junk fees,” said Alexandra Costello, vice president of government relations for the American Gaming Association, one of the nation’s largest trade organizations for casino and resort operators. Several Las Vegas-based gaming establishments are represented by the AGA, among them: Bally’s Corporation, Boyd Gaming, Circa Resorts LLC, Las Vegas Sands, MGM and Wynn resorts.

Additionally, the administration has given notice that it may be looking at changing certain federal regulations, Costello said.

“It’s this sort of call to stakeholders, whether it be consumers or folks like the AGA and the gaming industry to weigh in on what they’re talking about with regard to junk fees,” Costello said. “What the administration is contending in their notice was they want to go after fees that are considered junk. And what they’re defining as junk is by providing no value to the consumer.”

In a letter to Federal Trade Commission (FTC) Secretary April Tabor, AGA President and CEO Bill Miller said premium amenities like expedited night club entry, shuttle services, parking and high-speed internet are among services paid for by resort fees.

Miller also contended that resort fees are made clear up-front and early on in the booking process. Additionally, he said the fees provided value to customers.

“These examples and others are representative of features not usually provided with a simple guest room,” Miller wrote. “These additional services and amenities make for an elevated travel experience, with an attention to detail valued by guests. Resort fees are a signal to our customers that they will get more than just a well-appointed room.

“Because these extra amenities and services come at a cost to the resort, patrons are charged a resort fee — they are inherently valuable and therefore should not be considered “junk.”

Nevada Democratic U.S. Rep. Steven Horsford, agrees.

“The resort fees they charge are disclosed ahead of time and go toward funding improved Wi-Fi, EV charging stations, fitness centers, pools and business center services,” Horsford told the Sun in a statement. “The (Biden) administration’s efforts to prevent undisclosed charges will save Americans money.”

Miller’s letter included screenshots of the booking process with Wynn Resorts in Las Vegas, showing a dialogue box at the top of the webpage defining and explaining the reason for charging a resort fee, before any promotional or room rates are shown.

After a room is selected, Miller said, the resort fee is detailed in the itemized summary before any payment method is needed.

“Casino resort industry practice is to display resort fees early in the online purchasing process, typically no more than one screen following the base room rate, and at least one web page before consumers commit to the room and before any payment is required or made,” Miller said. “The disclosure often appears several times throughout the search and purchasing process, where a list of amenities covered by the fee can also be found.”

Who charges resort fees?

In a statement to the Sun, a spokesman for the American Hotel & Lodging Association said 94% of hotels nationally do not charge resort fees, but those that do tend to cover “unique and tangible” amenities like pool or beach access, food and beverage credits or special events.

“These fees directly support hotel operations — including wages and benefits for hotel staff — and when they are applied, hotel websites clearly and prominently disp[lay them for guests during the booking process, in accordance to FTC guidance,” the spokesman said. “The hotel industry looks forward to working with the Biden Administration and the FTC to ensure that the same standards of transparency to which hotels adhere also apply to short-term rental platforms like Airbnb, where nearly 55% of active listings charge a cleaning fee.”

Miller noted in his letter to the FTC secretary this isn’t the first time the feds have tried to crack down on resort fees, either. In 2012, under the Obama administration, the FTC released guidelines on how to make resort fees more transparent for consumers.

Costello, with the AGA, said member organizations already adhere to those guidelines and warned any further regulation could cause confusion among consumers and resort operators alike.

“These fees really do distinguish us from just your standard motel,” Costello said. “You’re getting a lot more when you stay at a resort.”

The argument for resort fees is especially strong in a city like Las Vegas, where many visitors come for lavish experiences, added Lucas, the UNLV professor. And if resort fees are done away with, operators could possibly charge a la carte for the amenities being lumped in under the current fee structure that’s industry standard.

“Our hotels have probably the best argument for it because we have just these massive resorts with tons of amenities,” he said. “Before we had them (resort fees), a lot of hotel guests were complaining about being nickeled and dimed, that every time they used their resort’s amenities, they had to pay for it.

“But one way or another, those amenities are going to get paid for. It’s like pick your poison.”

Toeing the line between over-regulation and effective consumer protection policy will be a tough task for the Biden administration, Lucas said. And it seems Nevada’s lawmakers will be vocal throughout the process.

“Las Vegas is the entertainment capital of the world, and our hardworking families depend on the success of our travel and tourism economy,” said Nevada Democratic U.S. Rep. Susie Lee. “I want to ensure that this industry thrives and continues to support our local economy, while protecting consumers from unjustified surprise junk fees. While we must work to limit true junk fees, I do not believe that transparent, fair, and upfront resort fees should fall into this same bucket. I look forward to seeing the White House’s full proposal.”

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Mike McNamara

Mike McNamara

A Las Vegas Realtor since 2008. Mike has a wide range of knowledge around all things Las Vegas.

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