Article Summary:

Resort fees have recently emerged in urban markets like New York, Las Vegas and Boston and it’s clear these fees are here to stay. But where will these surcharges be headed next?

Primary Category: Opinions

Secondary Categories: Independent Insights, Independents, Operations

Hotel owners and managers doing business in resort destinations have long fought for and against the much maligned “resort fee.”

This surcharge to the booked rate is justified with added amenities and services that come with a resort. Examples include multiple pools, golf courses, tennis courts, spa access, gym access and others customized by property.

The truth of the matter is that it is a great way to increase revenue without raising the rate. The resort fee is a similar construct to airlines implementing baggage fees—i.e. a great way to increase revenues and not everyone pays it.

Over the years, there have been multiple lawsuits against various operators fighting the dreaded resort fee on different legal theories including deceptive pricing, non-disclosure and tax avoidance. In general, the courts have upheld the right of hotels to impose surcharges as long as full disclosure is given in advance at the time of booking.

The resort fee is ubiquitous in Florida urban markets such as Miami and Ft. Lauderdale, but less so on the Gulf side of Florida. It is virtually everywhere in Puerto Rico and throughout the Caribbean. It adds millions of dollars in profit with nearly all of it flowing to the profit line, as the only cost is administrative in the form of credit card commissions. A great resource to determine who charges what, how much, by city and by property is www.resortfeechecker.com

The resort fee is now taking root in non-resort, urban locations including New York, Chicago, Los Angeles and San Francisco. In these urban locations, it is often called an “urban fee” or a “facilities charge.” The surcharge is marketed to cover certain added value amenities found in dense urban locations including free Wi-Fi, e-reader newspapers, complimentary water, shared bike access, business centers, complimentary wireless printing, 24-hour valet, concierge services, free coffee and the list goes on.

A recent survey of cities found resort fees being charged at the corresponding number of hotels, Miami (197), New York (157), Las Vegas (122), Los Angeles (103) Boston (72), San Francisco (55), Seattle (38) and Chicago (31). Operating hotels in an urban environment is expensive, and as you can see from the count above, urban fees are blossoming nationally and are here to stay.

The fees are structured differently but in general are either a flat fee per room night, or a percentage on top of the applicable rate; some fees incorporate the tax component into the fee while others add tax on top. The fees are adding millions of profit dollars to owners’ income statement.

Will suburban fees be next? Ex-urban anyone?

George Jordan is senior vice president of operations at Oxford Hotels & Resorts, overseeing a cluster of three-, four-, and 4 ½ -star hotels, both operating and under development. Jordan has worked in hotels for over 30 years, including the Arizona Biltmore, The St. Paul, The Marquette, The Drake, Raffaello Hotel, Hotel Felix, and most recently The Godfrey Hotel Chicago. New openings currently orchestrated by Jordan include the Godfrey Hotel Boston and LondonHouse Chicago. He rose through the ranks while attending college at University of Southern California and Arizona State University, where he obtained a B.S. in finance. He also has served as area food and beverage director for Hilton International, based out of the Drake Hotel Chicago, and also as hotel manager at the Drake. Jordan joined the Oxford team in 2009 as area general manager; he was promoted to senior vice president in 2012. His daily duties include oversight of Hotel Felix, Hotel Cass, Godfrey Hotel, and contributes his operational and marketing expertise to acquisition activities. Jordan is a well-respected leader and a member of many Chicago civic organizations including The Magnificent Mile Association, CCTB, DLC and serves on the board of directors for Lawson House YMCA and on the advisory council of De Paul University’s School of Hospitality. Jordan writes a quarterly column for Hotel News Now and is slated to be a cast member in an upcoming reality TV series.

The opinions expressed in this column do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Bloggers published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

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