Did President Biden Just Take On The Hotel Industry Over Resort Fees?

President Biden covered a lot of ground in his State of the Union speech on February 7. I was half-watching, checking email, when Biden said something that made me sit bolt upright.

He railed against “junk fees” being charged consumers. Then I almost did a Tom Cruise couch leap when Biden attacked hotel resort fees.

President Biden said, “We’ve written a bill to stop all that. It’s called the Junk Fee Prevention Act. We’ll ban surprise ‘resort fees’ that hotels tack on to your bill. These fees can cost you up to $90 a night at hotels that aren’t even resorts.”

Does the Biden Administration plan to take on the hotel industry? As the resort fee was launched in 1997, it may not exactly be a ‘surprise’ to many guests, especially the 40 million who visit Las Vegas each year. Still, the fees are certainly annoying.

The “junk fee” bill’s primary target might be LiveNation/Ticketmaster, in the crosshairs of legislators since the Taylor Swift ticketing disaster. But cellular, internet, airline and hotel fees are also called out.

One man’s trash is another’s treasure, as the saying goes. What Biden called “junk fees,” are a key source of revenue to the hotel industry which they do not have to share with the dominant online travel agencies (OTAs) like Expedia, Booking.com and other search engines.

Still, Biden certainly struck a populist note. Many people dislike resort fees, this writer included. The resort fee is a separate, compulsory charge presented to the guest at check-in which can include hotel Wi-Fi, parking, use of the pool and health club, bottled water, in-room safes, the phone in your room, etc.

Why isn’t all this included in your room charge? That would be a very good question. Even hotels that once publicly promoted their lack of resort fees, like Planet Hollywood in Las Vegas, apparently can’t resist the revenue.

According to analyst firm OTA Insight, “unbundling allows hotels to have the fee taxed differently, which of course helps contribute to properties’ bottom line. Additionally, by separating the resort fee from the room cost, hotels can offer lower room rates online. Internally, resort fees contribute to RevPar (revenue per available room), and are an essential KPI (key performance indicator) for hoteliers.”

More recent data is lacking, but a 2017 study found that U.S. hotels collected resort fees and other surcharges totaling $2.47 billion in 2015. That total may well have increased, as a CBRE 2020 survey found that “from 2015 through 2018, resort fee revenue for the CBRE sample increased at a compound annual growth rate (CAGR) of 10.9 percent. This exceeds the concurrent CAGR increases for room revenue (2.8%) and total hotel revenue (4.3%).”

In January, I paid a resort fee in Las Vegas, a city that can be said to have pioneered them. I was unhappy with the prices of hotels offered through the Consumer Electronics Show, so I booked a “4-star hotel on the South Strip” from Booking.Com’s Priceline. This turned out to be a $180 a night room in the bungalows of the 66-year-old Tropicana. At checkout, I also had to pay a $43 per night “resort fee” although the pool was closed and I never got to the health club. (The Wi-Fi worked OK.) I haven’t encountered Biden’s “$90 resort fee” yet, but I wouldn’t doubt it’s out there.

What’s the hotel industry side? Hospitality has led employment growth for much of the past year. The hotel industry argues that such growth is helped by revenue such as the resort fee, which the hotel gets to keep in its entirety. This can be an important source in an environment where the OTAs tend to push down prices and take margin from the hotels.

We asked for comment from the American Hotel & Lodging Association. AHLA President & CEO Chip Rogers noted, “AHLA will continue to work with the Biden Administration, the FTC and lawmakers on Capitol Hill to ensure a level playing field around transparency for mandatory fees, such as hotel resort fees. These fees provide guests with value and include various unique goods and services at each property that charges them.”

He added, “It is crucial that the same standards for fee display apply across the lodging booking ecosystem, including for hotels, as well as online travel agencies, metasearch sites, and short-term rental platforms.” Could he have been calling out the notorious Airbnb cleaning fee?

Only 6% of hotels nationwide charge a mandatory resort (aka ‘destination’ or ‘amenity’) fee, at an average of $26 per night, according to a 2022 OTA Insight analysis for AHLA. Nerdwallet analyzed more than 100 hotels around the U.S. with January 2023 check-in dates and found the average resort fee was $42.41, about 11% of the overall cost to stay at the hotel each night.

Hotel revenue management expert Robert Mandelbaum of CBRE found in 2020 that while only 6% of hotels had instituted resort fees, 50.2% of resort hotels (Orlando, Las Vegas, Hawaii, etc.) had such fees.

According to OTA Insight, “This fee is imposed by hotels to provide guests with additional services and amenities during their stay, such as access to hotel parking, fitness center, pool/waterpark, and a host of other perks. The resort fee can help hoteliers supply and maintain these services, without having to charge guests separately, helping them avoid needlessly nickel-and-diming guests for amenities while they’re enjoying their stay. This fee shouldn’t be characterized as a “junk fee,” but more of a transparent charge for consumers to get the most out of their experience at a destination.”

Will the Junk Fee Prevention Act ever become the law of the land? So far, it doesn’t appear to have been launched in Congress, surprising for such populist legislation.

But at least one copycat bill is being launched in California, where Assemblyman Marc Berman is authoring #AB537. He tweeted, “President Biden is right – Californians are tired of being duped by last minute hotel and resort fees.” AB537 will “ensure that the advertised cost of your hotel stay is the real price you pay.”