Nothing can dilute a pleasant resort experience faster than a surprise “resort” or “service” fee on the bill as you check out of the property.
“Resort fees started when guests complained they were being nickeled and dimed to death for everything from faxes received to charges for local phone calls,” says Robert Mandelbaum, director of research information services for PKF Consulting in Atlanta. “So resorts decided to just charge a flat fee per day to cover everything.”
During the post-9/11 hospitality business downturn, resorts and hotels were often timid or downright secretive about slapping individual and group guests with $10 to $20 add-ons to cover the cost of things like employee tips, parking, in-room coffee, morning newspapers, use of pool towels, fitness center charges, and other assorted services many guests assumed were included in the room rate package. Complaints and anger directed at the front desk often prompted removal of the fees.
Resort charges are a good way for hotels to raise revenue—sometimes thousands of dollars on a large group booking—without increasing room rates, Mandelbaum explains, and the success in getting the fees through the payment process syncs with the prevailing economic cycle in the industry. When times are bad, hotels are more responsive to guest complaints about them.
Changing Times
Nowadays, many resorts aren’t timid about adding the fees, however, because the tide has turned in their favor. In fact, some sales people and managers declare that such fees are mandatory, non-negotiable pieces of the bill they won’t cancel for anyone. But are they really not negotiable? Well, it depends.
“Getting rid of the fees really depends on which resort you are dealing with,” says Nancy Norman, president of The Norman Group consultancy in Boston. “Some resorts are really adamant about them. They insist on including them, even if a planner argues that her group will be on property for only a short time to do intense learning sessions, with little or no time to use the pool, fitness center or tennis courts. For these [properties], resort and service fees are a hardcore policy and regarded as another revenue stream.”
That said, there are situations in which a planner can push such fees off the master bill.
Norman is one of many industry veterans who say the yay or nay of resort fees can hang on the relationship between the planner and the hotelier.
“A lot can depend on relationships, how well you know the people you are working with and how much they want your business,” she says. “Sometimes they’ll roll the fee into the room rate, and delegates will never know it hit them.”
Full Disclosure
Rolling the rate and fees may happen, but it must be disclosed in the booking contract. Both Mandelbaum and Norman say “everybody” is in that up-front mode because it’s part of the SOX (Sarbanes-Oxley Act) effect.
“You must disclose everything in the booking contract that will affect the group rate,” Norman says. “It’s all about ethics.”
Mandelbaum says that hotels now must quote all fees, including taxes and service or resort fees, just as airlines and car rental companies have been doing for years.
So why don’t hoteliers just raise their rates?
Mandelbaum says that in the past two or three years, they have been doing just that, because occupancies are up and business is good.
“It’s more profitable to just raise rates,” he says, “even if you go down a little in occupancy. You might lose some business, but the higher rates are better for hotels in most cases. Resorts can be an exception to this, because guest count is more important than room count. Resorts have so many revenue centers, like shopping, golf, spa, and dining, and the more guests you have, the more they are likely to spend in these outlets.”
Points to Ponder
Megan DeAndrea, president of Bordentown, N.J.’s Global Planners, agrees with Mandelbaum that planners with larger groups sometimes have more wiggle room when it comes to resort fees.
“The larger your program, the more negotiating power you’ll likely have,” DeAndrea says. “If there are 300 people in your program, this gives you something to work with. However, there are some hotels that just won’t lop off that fee. If that’s their position, you can then ask them to work with you on the room rate. If the business looks attractive and the hotel wants it, they will find some way to work with you.”
DeAndrea suggests that when the program agenda calls for almost nothing but training sessions and no time for play in the pool or spa, point this out to the hotel sales person. “These kinds of sessions are often all work, with no guests or spouses who will use the property’s features. So we ask for consideration on fees.”
Avoid the Contest
To avoid contests with resorts over add-on fees, some planners look for properties that don’t inflate the tab to begin with. Even in “hot” markets such as the Hawaiian Islands, there are those who charge resort fees.
Such costs are a common supplement in the islands these days, because Hawaiian hotels are riding a wave of high profit margins nearing 30 percent, according to Hospitality Advisors, a Honolulu-based tourism consulting firm. High-priced rooms at The Ritz-Carlton, Kapalua on Maui also command an $18 daily “resort fee,” for instance, in addition to room rates that begin at $475 per night.
But managers of some Hawaiian hotels, such as the Sheraton Keauhou Bay Resort & Spa, have elected not to charge a resort fee. The Sheraton is out to rebuild the client base following a $70 million renovation that brought what was the original Kona Surf Hotel (originally opened in 1972) back from years of decline and inoperation. The 521-room Sheraton property on Keauhou Bay, in the midst of coffee country, also has a 10,000-square-foot ballroom and offers 36 holes of golf.
So while resort fees are a common feature in the prevailing market, planners still have some power to work around them, or simply walk away from fees they find untenable.
