Home » VT News » Wynn Resort Fee : A Theory

Wynn Resort Fee : A Theory

By JohnH on Friday, 11th June 2010 12:29pm
  » filed under Las Vegas  comments: 8


I've spent the 24 hours ruminating over why Wynn Las Vegas has introduced its new resort fee and I think I've come up with a workable answer.

Mike E commented on the original post that while Wynn Resorts has introduced the clearly "hidden" fee, they've also lowered rack rates across the board - both the Wynn website and Orbitz are advertising a rate of $150 per night at Encore during July 18-20. Compared against other resorts, this now makes Encore less expensive per night - excluding, of course, the resort fee - than Venetian, Palazzo, and Bellagio. Of course, once one adds the resort fee, that dynamic changes.

The importance of the cost-undercutting can only really be understood in comparison to the current governing dynamics of airline price structures. We all know that many travelers are now using sites such as Orbitz or Kayak in order to find the lowest average fare to, say, JFK and are then booking it directly through that airline or with the travel aggregator. The airline then adds their baggage fees and pay-to-play in air dining in order to make up the revenue lost on the discounted fare. In essence, then, they're lowering their rates in order to place themselves higher in these aggregators.

It would appear that that is what's happening now on a microcosmic scale at Wynn and on a macrocosmic scale within the city, itself. Each resort is lowering their rates in order to appear more economically attractive on Kayak, but are still making up for that deep discount with a resort fee that contains "benefits" which the average customer won't take full advantage of.

What I'm still getting hung up on is why, if that is the theory that is guiding this decision, Wynn would need or want to appear to be a cheaper alternative to Venetian, Palazzo, and Bellagio? The man has been on record I don't know how many times as saying that his resorts have always had the benefit of setting the rate ceiling and then dictating what his competitors will charge--although, in the face of introducing a resort fee that was "never going to happen," I'm not quite sure how much we can trust Stevie or the good folks at Wynn PR. Why does he need to undercut that enviable position, though? Problems with occupancy levels? Unadulterated greed?

I just don't understand why Steve would risk the resort's brand equity in order to pursue another attempt at discounting. It most certainly didn't work at Encore last year when they deeply lowered rates in order to drum up occupancy level, and if it is case governing this decision, it may not work in the future at both Wynn and Encore. Aggressive discounting attracts non-luxury demographic clientele and works to polarize your existing customer base. I, personally, wouldn't risk the equity in a brand that I've worked so hard to shape and finesse over the last five years just to get more heads in beds, drum up extra revenue, and then see many of my more desirable, well-heeled customers defect to Mandarin Oriental.

But what do you think? Is this an attempt at creative discounting or is it purely a money grab? Even in the face of the logic of the discounting theory, I'm still not sure which way the answer leans.


Comments & Discussion:

Thanks to David McKee at Stiffs and Georges for pointing out that resort fees are non-taxable. Operators don't have to share with the state or Clark County like they do on room rates, and the room tax rate increased in summer '09.

I agree with the above poster, it's a tax-dodge. Once the state or county decides to tax resort fees as well, they will probably be done away with since at that point they will only serve to alienate the customer.

Don't forget that sites like Expedia and Orbitz also get a big wet bite from all room rates that they book. By moving the price of a room away from the official rate over to a private fee, they don't have to share it with the taxman or the Travelocity gnome. If they could charge a $1 rate and a $199 resort fee, they would.

It's a hidden fee, plain and simple. The average visitor is generally not informed enough to consider these fees. Most the people going to Vegas, high or low end, aren't following this site or industry trends. While if you book directly through the hotel's website, these fees are usually fairly transparent, but when you book through a 3rd party they are rarely factored in the purchase price, and usually only "noted" in the fine print. I've seen it first hand when my friend booked a "deal" at the Mirage through a third party, only to find out the 15 dollar a day resort fee would be tacked on our bill when we checked in. My friend is a huge cheapskate and needless to say he wasn't happy after already figuring out his budget for the trip. I would guess over half of all guests are unaware of the fee at the time of booking. Basically Wynn is resorting to luring naive guests with artificially low room rates and resulting hidden fees. Seems like a horrible strategy: attract lower budget clientele and then make sure they don't become repeat customers by pissing them off with hidden fees. It will inevitably just lead to endless confusion and arguments at the reception desk.

"The man has been on record I don't know how many times as saying that his resorts have always had the benefit of setting the rate ceiling and then dictating what his competitors will charge"

I think on standard "deluxe" rooms, Mandarin now sets the ceiling. I honestly doubt Wynn is going to pull the resort fee on comped guests, who are his most well-heeled clients.

"I honestly doubt Wynn is going to pull the resort fee on comped guests..."

Things may have changed in the past three years, but when Wynn comped me in '05 and '06, the internet charges showed up on the bill when I brought it up on the TV, but it always disappeared when I checked out.
Wynn sent me an email this week extending my comped suite offer through mid-September. It goes to show I spent too much there in the past, but it was fun!

A couple of people mentioned that resort fees are not taxed, but I got an offer from Mandalay Bay/TheHotel and when I put in my reservation, there was a tax on the resort fee. Maybe someone else got the same offer which ends tonight: 72 Hour: Up to 20% off Room Rates with 2-for-1 Concert on the Beach‏.

Specifically, here is the breakdown and you can see TheHotel is charging a tax on the resort fee:

1 V Suite 5 nights $559.95
Taxes: $67.19
Resort Fee: $75.00
Resort Fee Tax: $9.00
Total: $711.14

Deposit Due: $109.75

Comments Are Closed

Subscribe via RSS

Recent Comments:

michigan2010 posted: "MGM equals cookie cutter casino. No to reason to step foot in Bellagio again. Just hope they don't screw up..."
» Sayonara Bellagio Table Game Canopies...
saharalv posted: "I wish the editors were the entire electoral college in 2016...."
» Introducing the Trippies Class of...
fatbastard posted: "So many people letting a billionaire live rent free in their heads. Funny. Too bad it also detracts from the..."
» Introducing the Trippies Class of...
wpsteel66 posted: "Total bummer…talk about taking the class and uniqueness away from the Bellagio…another smart move on CEO Jim and making all..."
» Sayonara Bellagio Table Game Canopies...
damania posted: "Is there a podcast?..."
» Introducing the Trippies Class of...

» More Comments