Resort fees are proving profitable in the hotel business, with $2.1 billion in revenues collected in 2013 with an estimated margin of 80% to 90%.
But that does not necessarily make them more palatable to travelers.
The key is to price and present them strategically, according to two recent studies.
Little impact on booking decisions
In the first study, “Consumer perceptions of resort fees and their impact on hotel selection,” 161 Las Vegas visitors were asked various questions about how resort fees affected their hotel booking decision.
Of the 58 Las Vegas hotels participants were staying at, 57% of the properties did not charge a resort fee, and 43% had a mandatory fee. For those respondents staying in a hotel with no resort fee, only 12% intentionally booked that hotel because of the lack of a resort fee. Of the respondents staying in hotels that charged resort fees, 92% stayed in the hotel they wanted regardless of the resort fee, and only 8% changed their hotel as a result of the resort fee.
So even though consumers complain about additional add-on charges, their hotel booking decisions were not influenced by the presence of a resort fee.
Participants also were asked their pricing preference if they were to book a hotel that had a mandatory resort fee.
More than 40% preferred when the hotel charged one bundled rate that included the room rate and all amenities. Only 25% preferred a partitioned price with the two separate charges.
Be sure to bundle
A follow-up study was conducted to better understand consumers’ pricing preferences to help hotel management establish pricing strategies that can be better received by consumers.
Operators should consider several specific pricing components: They can decide whether to charge a single, bundled price inclusive of the room rate and amenity costs, or to partition the price into two separate and distinct charges. They also need to determine the number of amenities included in the mandatory fee and the amount of the fee.
In the study “Pricing strategies for resort fees: Consumer preferences favor simplicity,” 400 adult consumers who had stayed at least one night in a hotel in the past year were asked to consider an upscale (4-star) Orlando, Florida, hotel that would include an attentive staff and an array of amenities including Wi-Fi, fitness center access, parking, shuttle service to attractions and airport, and bottled water.
Fees and amenities were shown at three levels:
- $0 with all amenities being charged a la carte;
- $10 with the customer choice of three amenities; and
- $25 for all-inclusive amenities.
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