Resort fees have gone up by $2 at eight locations and by $5 at the Luxor and Excalibur.
MGM is not going it alone in increasing prices. Last week, CEO Jim Murren said:
“We are lagging the market — Caesars properties have higher resort fees, which is a great change since they started with no resort fees not long ago, but welcome to the party.”
MGM faces higher costs
Although MGM has posted nicely rising profits, partly as the result of President Trump’s tax cuts, MGM is facing higher employee costs.
In negotiations that kick off in March, Culinary Local 226 is demanding higher pay and improved benefits for its hotel and casino workers. Higher resort fees are one way of making extra revenues without raising headline prices.
And their contribution to the bottom line is by no means insignificant. Wikipedia notes that:
“MGM Resorts International stated that, for Las Vegas hotel rooms in 2011, “Our RevPAR (revenue per available room) in the first quarter was up 16%, including resort fees. Excluding resort fees, REVPAR was up 11% in the quarter year-over-year.”
That five-percent difference in revenue per room adds up to a lot of money over time.
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Casino resort fees are a marketing sleight of hand
Resort fees are charges levied on hotel guests in addition to the room rate. They are spuriously justified as payment for services such as wifi or use of the pool or gym.
In many countries they are illegal, but under US and Nevada state law hotel and casino owners are free to charge what they like.
This means that the advertised room rate acts a teaser to attract customers, but the real price paid per night is higher by the amount of the resort fee. It’s a bait and switch practice that irritates many visitors to Nevada.
At the MGM Grand, Mirage, and Mandalay Bay, the resort price is now a hefty $37 per day. According to Richard N. Velotta at the Las Vegas Review Journal, these are the sort of numbers that may well put people off choosing Las Vegas as their holiday destination:
“But there’s also a new wave of sentiment from longtime loyal casino customers warning that soaring resort fees and paid parking policies at Strip casinos threaten to kill the goose that laid the golden eggs.”