Home » VT News » Vegas Gang #93 : Derek Talks Resort Fees

Vegas Gang #93 : Derek Talks Resort Fees

By Chuckmonster on Friday, 9th August 2013 1:08pm
  » filed under Las Vegas  comments: 12


Earlier today, Derek Stevens, CEO of the D and Golden Gate, joined the Vegas Gang to discuss their announcement earlier this week that they would be implementing resort fees at both properties.

No announcements, no topics, no sure bets... this is just Derek answering our questions and explaining their decision to institute resort fees.

Check it out here Vegas Gang #93 - Derek Talks Resort Fees.

Tagged: vegas gang   derek stevens   the d   golden gate   resort fees   vimfp   


Comments & Discussion:

If we have any commentary on this topic left in the well, it will be in our next episode, #94.

I appreciate his honesty on the subject for wanting to be on the 1st page when arranged by price. However, I sure hope we don't see these $21 rooms being $41 next year, because then I'll know that all casinos are in cahoots with each other to massively drive up room rates.

Whatever the price, if they all get greedy and the prices go up higher than the off Strip and non downtown properties, then I'll go stay at the La Quinta or Best Western's around town and hike my way in until prices do get more reasonable... Downtown prices used to be competitive but with resort fees, the trip back down to the classic un we know and love, makes it not worth it. Not to say there isn't fun to be had downtown. It's just a different kind of it... Eventually if they keep the fees, everyone downtown will od it to keep up. And the innovative ones will take it back. I really don't care about resort fees, so long as the total price point is competitive. Good on the hotels for keeping their would be lost cut of 25% but you have to remind everyone every time about it...

I thought it was a good discussion - I was surprised at how much 3rd party drives the industry these days - I definitely understand Derek's reasoning on adding it since it cuts the amt paid to the 3rd party. At least we have an owner who's willing to be honest and not claim that the people "wanted" these fees. I'm staying at the D for the first part of my VIMFP trip and will continue to maintain play at Derek's properties.

This was a good discussion and I appreciate Derek's candor in a lot of his comments.

One thing that confused me was a kinda off hand comment Derek made about how he positioned the resort fee. He said he didn't bundle many different things into the resort fee, but instead dropped the price of the room. But everybody else dropped the price of their rooms when they went to resort fees; they just didn't sell it as a price drop (or perhaps more accurately, a price neutral move.) So why does Derek think that positioning this as a price decrease will be more satisfying to those who are skeptical (if not angry) about resort fees?

Stevens mentions something called "OTAs" at about the 7 minute area. Can anyone tell me what that means?

OTA=Online Travel Agency

I feel like Derek left something till the end that was the whole reason for this kerfuffle.

The OTAs only get a piece of the pie that they are directly responsible for. THe 22 dollar room rate if you will. The OTAs can't touch the resort fees and that goes directly into the pockets of the owners.

I actually have less issue with this now that I heard that explanation. Don't try to sugar coat it, just say thats what it is. Enough of the BS of wanting to get on the first page, just say you want more money without some random company touch it.

And yes OTAs are a massive driving force of travel industry now. You would be surprised how foolish the general public is in using them thinking they are getting some deal, I have yet to find a rate on a site like expedia traveloctiy etc, that I couldn't find on the website of wynn, ceasars, or mgm.

Its to bad the properties cannot entice visitors to book directly through their site with some worthwhile incentive. I think the OTAs are a great starting point, but I will use them solely as a reference and then move to the property website for the booking. How about "no resort fees when you book direct" If multiple properties could jump on this trend, it would help drive the traffic away from these sites. I have to imagine the publicly traded companies would have a difficult time selling this to shareholders though...

Great talk, very much on point. There's only one villain in this story, and it's the OTAs. As I said once before in another post, money that goes to the OTAs leaves the Vegas ecosystem forever. If you pay $100 for a room and $25 of it goes to Priceline, that's $25 that can't be used to keep the lights on, pay staff, clean the rooms, etc. Derek is right that resort fee money is excluded from Priceline's take, but my worry is that as hotels abuse that loophole more and more, the OTAs will finally decide they don't like it and will force some kind of change.

@koltunowicz: it won't work. The OTAs insist on price "parity". It's on page one of any contract. Expedia is obligated to mention the resort fee in the fine print when a guest books. If the hotel's own website doesn't also mention the fee, that's a violation of parity. Similarly, the hotel can't offer a free buffet, gaming credits, or any other booking incentive without also offering it to the OTAs.

The OTAs have this dominant position because they offer 3 things that customers want. First and most important, they offer a price shop. They give you the ability to scan and sort every hotel's price, and even filter the results by things like star rating and geography. Individual hotels simply cannot compete with that. People used to go to travel agents to provide that very service and Expedia gives it to you on your computer.
Second: ease of booking. On Expedia, you're entering dates on the first page, choosing a hotel on the second page, and finalizing the transaction on the third page. Most hotel websites still are nowhere near that nimble. Third: lowest price guarantee. Expedia guarantees you will find no publically available rate that's lower. A hotel's website doesn't give you this assurance - in fact it makes you feel like you're a sucker paying retail.

There's no easy answer to the problem of OTAs sucking money out of Vegas. In the short term, we should all use Expedia to shop, but then make the final purchase on the hotel's own website. (and do it for air travel too). In the long term, hotels will need to invest in some kind of OTA alternative - a site that mimics an OTA's function but is family owned, so to speak. Get that site up and running, and then cut the umbilical with the OTAs.

@MattK That was one of my thoughts after the call too - eventually these OTAs are going to get fed up and use their market power to extract something else from these hotels, no? Seems inevitable. This game isn't over, the players are just finding the current rules that are exploitable.

He addressed some posts directly (including mine, hi Derek!) and it was great to hear some direct talk from someone who has "skin in the game."

I listened to the interview and I tried to think of what Jeff S would have asked if he was here for this chat. And I think what he would have asked was, how did they arrive at $20? That's twice what the Plaza is charging, four times Golden Nugget. You know, if you want a room not unlike the Flamingo you could on some nights find them downtown for not too much more than $20. It's a steep cliff for what Derek himself admits allows him to sort of use room rates as a virtual billboard for the property. I'm just looking at their reservations page right now and they have some $27 nights in September and $22 in Nov. $20 is going to represent a significant increase over something like paying $200 for a room for a room at Bellagio.

Sure, some people will see it and pay anyway, but some people used to let their web pages display pop-ups, too.

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