Some Las Vegas resorts are scaling back their fees or offering “no-resort-fee” promotions during slow periods, despite a lack of data showing a relationship between hotel fees and visitation.
Others are hinting they will not raise fees this year after Las Vegas visitation reached a four-year low in 2018.
— In July, Wynn Las Vegas stopped charging parking fees for overnight guests and day visitors who spend at least $50 at the property, saying the fees were “counter to the personalized service we provide.”
— The Cosmopolitan of Las Vegas canceled parking fees for overnight guests at the start of this year “as an added value.”
— SLS Las Vegas, Golden Nugget and Red Rock Resort have launched temporary marketing campaigns in recent months offering rooms without resort fees, taking advantage of the interest the topic receives on social media.
A resort fee is a mandatory fee that an overnight guest must pay for additional services provided by the property — such as Wi-Fi, pool and gym access — regardless of whether the guest actually uses them.
“We are always trying new offerings to see what resonates with clients and this is just another tool in our arsenal,” said SLS spokesman Christopher Abraham.
Red Rock chose the “no-resort-fee” promotion for March and April to distinguish its property from others offering spring break deals, spokeswoman Lori Nelson said.
MGM Resorts International and Caesars Entertainment Corp., the two largest Strip operators by number of properties, have said they are maintaining their current resort and parking fees after raising them a little over a year ago.
“We don’t have any plans on changing the structure we have in place,” Caesars CEO Mark Frissora told Wall Street analysts Feb. 21. “We are certainly sensitive to the fact that we can hurt our own profitability and revenue growth if we get exorbitant or do things that have no value to them.”
Caesars Entertainment offered free parking at The Linq Hotel in August to see if it would boost visitation. Frissora said it had no impact.
MGM Resorts has no plans to increase resort fees this year, Chief Financial Officer Corey Sanders and Chief Strategy Officer Aaron Fischer told a JPMorgan conference in March.
A Las Vegas Sands Corp. spokeswoman declined to comment on its resort fees. The company, which operates The Venetian and Palazzo, does not charge for parking.
The number of visitors traveling to Las Vegas fell from 42.9 million in 2016 to 42.1 million last year. Four other major U.S. convention destinations — Orlando, Chicago, New York and San Francisco — all saw visitation increases last year. Hotels in those cities also charge resort fees.
Casino executives and the Las Vegas Convention and Visitors Authority said they don’t have evidence the fees are turning people away.
“We believe it is premature to state that resort or parking fees are directly resulting in a net decrease in overall visitation,” LVCVA spokeswoman Jackie Dennis said in a statement to the Las Vegas Review-Journal. However, she did not say whether the LVCVA has asked visitors about whether they are making fewer trips to Las Vegas because of the fees.
Ohio resident Nino Bandera said he’s made close to 100 visits to Las Vegas over the past 50 years to gamble and vacation, but the 69-year-old is skipping Las Vegas this year because of rising Strip fees and higher food prices.
“Enough,” he said of fees. “(It) breaks my heart, but we are going to drive to Tunica and give it a try.”
Illinois resident Chris Max said resort fees are not significant enough to stop him from visiting Las Vegas this March for the NCAA Tournament. Max booked his room at Treasure Island, which charges a daily resort fee of $37.
“People kind of expect those types of hotel charges. It is not a large amount of money,” he said.
The LVCVA blamed the rotation of the triennial CONEXPO-CON/AGG convention in part for last year’s decline in visitation. The construction and agriculture industry gathering is one of the largest U.S. trade shows, attracting roughly 130,000 participants. It was last held in Las Vegas in 2017 and will return in 2020.
There is no shortage of possible explanations for the valley’s visitation decline.
The number of visitors last year also was hurt by fewer events like boxing matches during the summer, casino executives from Caesars, MGM Resorts and Wynn Resorts said during earnings calls last year.
International visitation also might have been affected by the declining value of foreign currencies — which makes trips to the United States more expensive — as well as tougher visa requirements.
Competition from other states with gambling also has been growing.
Several resorts have opened on the populous East Coast — including in New York, New Jersey, Massachusetts and Maryland — over the past two years. Tribal casinos in California, the largest visitor market for Las Vegas, have been expanding and upgrading their properties as well.
And about a half-dozen states began offering legal, regulated sports betting late last year, breaking Nevada’s monopoly.
Several of these issues had been widely flagged, yet executives were still surprised by the weak Las Vegas visitation last year, especially during the summer months.
MGM Resorts CEO Jim Murren told Wall Street analysts during the company’s earnings call on Aug. 2 that his company was forced to cut Las Vegas hotel room prices during the second and third quarters to draw leisure travelers because conventions didn’t fill enough rooms.
Frissora told the analysts Aug. 1 during a Caesars earnings call that Las Vegas summer visitation was impacted by fewer events at T-Mobile Arena.
Following the dismal earnings calls, Wall Street analysts began to ponder more seriously whether fees were also to blame.
Brian McGill, a gaming analyst at Telsey Advisory Group, has been warning since at least June that fees were impacting visitors’ perception of Las Vegas as an affordable destination.
He reiterated that thesis in a Nov. 28 report, saying Las Vegas is not as cheap as it looks because of the hidden fees. “Our concern is not so much with the gambling crowd, but on the more casual visitor to Las Vegas,” the report said.
“Visitation to Las Vegas has been in decline now for almost two years during a very strong economic time,” McGill said in the report. “This is due to Las Vegas pricing itself out of being an affordable destination.”
The Review-Journal is owned by the family of Las Vegas Sands Corp. Chairman and CEO Sheldon Adelson.
Resort fees, including taxes on those fees, now range from $30 to $50 a day for most Strip and off-Strip properties. During slow periods resort fees can increase the price of a room as much as 100 percent at select hotels, such as Circus Circus and Rio.
Hotels say they charge resort fees for the additional services they provide, like gyms, pools and WiFi. All guests must pay the fee regardless of whether they use the services.
Online travel agencies rank hotels from least expensive to most expensive based on advertised room price and not on total cost, including fees and taxes.
Additionally, hotels pay a commission to online travel agencies based only on the room price and not on the resort fee, according to analyst Chad Beynon with Macquarie Capital. This gives hotels an incentive to increase fees instead of the advertised room price, Beynon said.
Commissions paid to agencies like Expedia typically run between 10 and 15 percent, Beynon said.
A poll published by the Las Vegas Convention and Visitors Authority last year found 37 percent of people visiting town used an online travel agency like Expedia while 19 percent booked directly with a hotel.