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Pencil: The Golden Gate and The D Add Resort Fees

By Chuckmonster on Thursday, 8th August 2013 11:20am
  » filed under Las Vegas  comments: 48

   

Yesterday morning, Derek Stevens, CEO of the D Las Vegas notified us preemptively that The D and Golden Gate would be instituting a $20 per night resort fee at The D and Golden Gate. He attached graphics of the two statements which would be placed on his properties' websites later that day, containing his statement.

The D

Here's the full text of Derek's statement:

Effective with any new reservations for arrival on August 19, 2013 and beyond, the D Las Vegas and Golden Gate will implement a $20 resort fee per night which will be offset by offering the most competitive room rates in town. Guests will also be provided free high-speed Wi-Fi access, $10 off the D showroom tickets, and free local and toll-free phone calls.

Over the years, I have been a critic of resort fees in Las Vegas. But now, the reality is that over 85% of all hotel rooms booked today in the city include a resort fee. This puts our hotels, the D Las Vegas and the Golden Gate, at a disadvantage when consumers book their stays online, as most consumers initially evaluate hotels by price. We'd like to be fairly considered when consumers are making their reservations and don't want published rates to distort consumer choice. Our resort fee will enable us to offer lower room rates while adding free Wi-Fi and show discounts, and our total room cost will be a very competitive value in the marketplace.

Like many of you, I was quite surprised by this announcement. During the height of the Twitter firestorm directed at Caesars Entertainment for their abrupt reversal - and pathetic explanation - of their much touted "No Resort Fees" policy, Derek responded to our post listing Caesars' new resort fees with:

Unlike Caesars' reversal and the bizarre "Fremont Street Experience Fee" bait & switch by neighboring 'No Resort Fee' property Golden Nugget, Derek has chosen to own the resort fee announcement and explain the reasoning to guests. The impetus here - just like the add on fees when buying tickets - is to keep the published rates low, and keep the D's pricing competitive with similar quality resorts that have ballooned their rates with hidden fees.

The interesting thing to note in Derek's statement is:

$20 resort fee [...] will be offset by offering the most competitive room rates in town

And here's the offset...

Resort Fee

Golden Gate and The D's hotel room rates, slashed by $20.

Caesars Entertainment and MGM Resorts International both boasted on investor earnings calls how resort fees were implemented to extract more revenue out of hotel room product and toasted their success and future growth. Conversely, the room rates above back up Derek's explanation... when all is said and done, we're still paying the same rate, but The Golden Gate and The D's are listed lower.

The magic trick is further clarified when looking at the listing of Fremont Street joints on VT's Expedia powered reservation system.

Resort Fee

When sorted, by price, lowest to highest using random dates in September, The Golden Gate and The D are at the top of the list. The actual price, with the resort fee, is the highest of all hotels in Downtown Las Vegas, save the Golden Nugget. The price we pay is the same as it was before, but The D and Golden Gate have jumped to the front of the line using some shell game tactics designed to fuck the competition.

Derek is the CEO of two large corporations. He has the brains of a businessmen, the soul of a Detroiter and the hands of a plumber. The difference between Derek and the Murren/Loveman is that he's told us how the magic trick works and who he's trying to screw - the competition.

Don't mistake my explanation for approval. The resort fee game fucking sucks, BUT the vast majority of folks who come to Vegas a) don't do research before booking b) don't know what they want/need/like c) gravitate towards a name they've heard a coupla times d) book resorts based on budget and e) "Who stays in their room anyways! It's Vegas!" If you're reading this, you're f) none of the above. Now that you know how the game is played you can use this information to make better decisions... be it stay at the D or some other joint that isn't involved in the shell game.

Derek has agreed to talk with the Vegas Gang this week to discuss the resort fee addition. If you have any questions you would like to ask him about this or anything else D/Golden Gate related, post them in the comments and I will do my best to get as many of them answered as possible.



Tagged: golden gate   the d   resort fee   fremont street   derek stevens   





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Comments & Discussion:

As long as comp rooms remained comped, I completely buy the explanation. As soon as my comped room at the Golden Gate costs me $20, Stevens pants become a-fire.

i said it on the board, i'll say it again here:

i'd much rather see an explained resort fee than a 6/5 natural.
which is why i will now never stay at a caesars property ever again. even the low end mgm joints offer a better overall experience than any caesars resort i've been to.

What percentage of bookings comes from these websites? Are they trying to be known for the cheapest rooms downtown?

Here's the thing...I'm not getting anything of value from this resort fee..

Give me some bottles of water or a newspaper...or some pancakes..but $20 for a fee at Golden Gate just bugs me..I realize that Mr Stevens has made significant investments in downtown and he has investors to satisfy..but come on...

At least he's upfront about it...but that $21 room rate IS NOT what you'll actually pay...its $41..which is fine..but just be honest..that's all..

Vegas has sports books--and that will keep me coming for now...but if sports betting ever expands, and the CT properties don't charge resort fees..then I may just stay home...breaks my heart on some levels...

It's nice of Mr. Stevens to give us an explanation but as far as I'm concerned none is necessary. As an adult, I understand that he runs a business and that it's his job to make as much money as possible since if he was to go out of business I would not be paying his bills out of the kindness of my heart and neither would anyone else that complains about paying these resort fees. They suck, but that's the price we pay if we want entrepreneurs like Mr. Stevens and the D and the Golden Gate to survive and thrive and hopefully attract even more folks to Downtown!

Not that it should surprise us, but Friday and Saturday saw no change.

Stevens isn't going to turn the industry around by himself (though I wouldn't take the Golden Gate at the second most expensive hotel downtown, sorry.) The whole industry is going to need the same kind of rules airfare got.

I agree with meltyrselfdown. I'm staying at an MGM property in October because of CTE's fees.

Resort fees are not in just Vegas. Go to Orlando, it's resort fees plus up to $20 a day to park a car at the hotel. I can see a parking fee in downtowns like Chicago and New York, but Orlando?

I think Derek's rationale is a bit short sighted. I would rather have guests initially stay elsewhere and get burned by resort fees than start burning them myself.

The other question is how will the VIMFPers continue endlessly and shamelessly shilling for the D?

El Cortez, as usual, leads the pack in value and honesty downtown, imo.

^^ insightful!

I'm glad you pencilled it and found the same thing I did in that rates had dropped $20 on many nights over their calendar. However, I will say this, let's not gush over Derek Stevens just yet, it's very likely that over time those rates that are at the lowest will creep back up to their previous levels, now with the additional resort fee.

I don't fault the D for doing this, and I appreciate that they've kept to their word so far in reducing room rates, but I've also been around long enough to know that truth in business is a funny thing.

Lack of or existence of a resort fee has never been a consideration when deciding where to have VIMFP events (at least for me, I can't speak for Chuck).

Some interesting discussion here. I have a bunch of questions myself as well.

@deedubbs - question for you on your comment: I'd agree that El Cortez is definitely a great value. In what way do you feel it is more honest than other properties downtown? And as a corollary - which properties do you find to be dishonest and why? I think I may know what you mean but I'm not completely sure. Thx.

So 50% of my hotel bill is the resort fee. Just wonderful. I can't wait till other places like gas stations start charging me a lift fee when I just fill up.

In some respects, this is deception; that being said all hotels (as well as the third party sites one can book them through) that charge a resort fee are not necessarily up front about them during the booking process (even more so when using a third party site). At least The D and the Golden Gate put the notice front and center on their booking page; other hotels tend to bury it in the fine print.

Dropping the rates does jump them up higher on sites like Kayak, but not always. Checking the dates of my trip for VIMFP, the Golden Gate is the second hotel when sorting by price low to high for Downtown and The D is sixth.

I still think that perhaps hotels ought to start targeting those who don't book directly. I that remember when airlines started to push their own websites over the third party sites, they made of point to promote "no booking fees" (The online travel sites charged a booking fee since they didn't get as much of a commission from the airlines on the sale.) and eventually the major travel sites dropped the booking fee. I remember several years back, Delta was giving a discount on your ticket if you booked on Delta.com. Frontier Airlines recently rolled out a new baggage policy in which those who book via their channels get a free checked bag and aren't charged for a carry on. If you booked the ticket through a third party, you get charged to check your first bag and have to pay a fee if you want to bring a carry-on bag. So why not have a hotel that gives its' best rates to those that book through them and slap a $20/night resort fee on those that use a third party site? More often than not, I book directly with a hotel as opposed to a third party site.

The Plaza should not be included in the casinos that are being "fucked". The Plaza has had a $10 resort fee for at least a year. In the Expedia exmple, that puts them in between the Golden Gate and the D at 44$ per night.

@dirt so what if i told you that you would only have to pay $2.50 a gallon for gas and $1/gallon lift fee. you're still paying $3.50 for the same amount of gas.

I think Vegas hotels are heading for a confrontation with the online travel agencies. By putting half of the D's room rate into a resort fee, the D just unilaterally altered its contract with Expedia and will now pay them half of the commission it did yesterday per midweek room night. If you were Expedia would you just roll over and take it? I think Expedia believes that it will make up the difference in increased volume, but the increased volume is only coming at the expense of reservations they would have booked anyway. When resort fees were only $5 or so, and could be justified as energy surcharges or things like that, it could be overlooked. When the resort fee is half the room cost, it's a major issue for the travel agencies.

If all of downtown rapidly adopts resort fees (which seems certain to happen now), this might finally trigger that confrontation.

@vegasdean thanks for the errata! i've fixed the image

As Chuck put it, Stevens decided to "own" the announcement regarding the the resort fee. That is what has been impressive about Stevens. Being an owner is not about making everybody happy. Consider the beat down he took from a PR standpoint when his choice of naming his property was ridiculed. Stevens did not back down and believed in his idea to the point where he let the property's performance speak for itself. My impression is that he is a fierce competitor. His competitive fire bodes well for hard core LV fans despite the sting of yesterday's announcement. The fact that he reaches out to a group like VT makes me feel like he values a relationship, or at least cares enough to pretend to value a relationship with his clientele. After visiting LV for over 30 years and 75 plus trips, I don't base my stays on resort fees. Based on Steven's ownership, I will be staying downtown for the first time in my life during VIMFP.

@chuck it's deception and does not allow one to make a fair comparison. I did not use the lift and I will not use what's in the resort fee. I don't see shows, I don't use the Internet and I carry my phone.
For the gas station I would waste my time pulling in and asking about a lift fee. For a hotel not only will I have to look for a best price but now have to go looking for the extra fee tapped on. Is the first like in the Expedia search saying that there is a $20 dollar fee? And again a 20 dollar a night room with a 20 dollar resort fee? You don't think that's $hit? I know that's the way Vegas is going, but they should stop pissing on people's heads and telling them its raining

@dirt just to remind you, i'm not arguing in favor of resort fees... i hate them.

Thanks for the skinny. I guess I'd ask Derek if he thinks people make too big a deal of resort fees. Ultimately, you pay one price, no matter how it's broken out, right?

Why don't third party booking sites include the resort fee in the advertised price in the first place? Seems that would fix this nonsense.

Watching the reaction to this here and on Facebook and to previous fees, different people are upset about different things but you can definitely see a pattern and in many cases it seems it's really not about the money but more about the process / how the costs are framed.

At a really high level it is a fascinating breakdown of the 'science' (I know it's not a real science) of pricing.

The reaction so far that I've seen has unsurprisingly negative from both customers and bystanders. Smart business folks don't like to do things that their customers hate so unless they're just to dumb to realize they're doing something the customers won't like, they have reasons. Whether they are good or not is of course debatable but I'm really looking forward to getting some more commentary from the decision maker in this case.

I personally don't like resort fees (other than Caesars execs, I don't think anyone in history has ever said people want them) and I really really hate when they are fine-printed. Like most of you I've paid them many times.

What I'm particularly fascinated by at the moment is how they, especially when combined with online room sales, are bending the cost curve and, like a black hole, sucking in everything in their nearby orbit.

Chuck I know it's this is finally getting to me. I'm usually the quiet guy in the corner of the site.

I cannot believe how people lose their shit over this. Mr. Stevens is the one who invested in the properties and he will obviously do whatever it takes to make them busy (great gambling odd, great dining, fair drink prices) and he also needs to ensure he gets as many room nights possible and this is a means to that end. Do you really believe people do not shop based on price?? I personally don't give a shit about the fees and will stay where I want as it's my vacation and I will choose a property that is in my price range and has the amenities I want not whether they have an additional fee, I can do the math. To piss and moan about something you have no control over is pointless, if you don't like the fees stay elsewhere and gamble elsewhere, Vote with your wallet. I'm sure the executives at the D considered that they will lose a certain amount of guests over the resort fee but in their opinion they will gain more in the long run, time will tell if they gambled and made the right decision. The fact that they lowered the rack rate should be evidence that they are not randomly jacking rates. As for the comment that rates will rise to prior prices plus fees, that may happen but not if they can't stay competitive with the rest of Fremont. /rant

@vegasdean some do. there are a lot of moving parts at play in the resort fee.

1) gaining competitive pricing advantage
2) lowering price while not sacrificing revenue
3) lower prices means lower commission paid to 3rd party retailer
4) resort fees are taxed differently than hotel rates

Also worth noting that Wynn bitched about Hotels.com by name on the earnings call last week. MGM also discussed transitioning guests from 3rd party bookers at length, via M Life sign ups, social media marketing and the MyVegas Facebook game.

As some have stated, the price of a hotel + resort fee in Vegas can be less expensive than other cities.

I just was in Nashville, TN for a meeting and stayed at the downtown Hilton. Convention rate per night was $169 and then THREE different taxes added to the bill (state, city, and occupancy). These 3 charges added $28.27 (16.73%) to the night charge. Then on top of that, in-room wifi and parking were additional daily charges plus the workout center was not that great. They did offer free USA Today and Wall Street Journal at the front desk.

So even if I pay $25 + tax (just over $28) resort fee per night for a $79 or $149 night at Aria, I still am paying less than what I did for a ‘convention rate’ at a nice downtown hotel but not in the atmosphere of Vegas.

I completely understand why people are not happy with resort fees and will not argue with them. I guess I am an exception since I do use the fitness center, my iPad, and glance thru the daily paper. The resort fee actually saves me money.

I agree with the comments on the methods used by these Vegas hotels to increase rates via the resort fee. I fully understand that people (who do not keep up with Vegas and the resort fee issue) get a huge surprise when they check-in and that pisses them off. I would be too. But I know that I am going to pay a resort fee for the nights not comped.

@donnymac great points. people do shop based on price, but the hidden fees thwart their ability to know - above the boards - what the hell they're paying for anything. fine print exists to hide stuff.

in the menu, the beer is listed at $2.50 a pint.
Waitress tells you there is a $2 glass fee for each pint you order.
But the sign outside says $2.50 pints!
$4.50 for a pint isn't outrageous
However, the bar next door has a sign that says $3.50 pint...

Resort fees annoy me for two reasons:

1) I'm not certain, but I think they're a state tax dodge; in that innkeeper tax etc apply to the room rate but not the resort fee. Maybe this is the kind of thing that Stevens would know more about, as a local at least I'd like to know. Since hotel room and entertainment taxes etc are a source of government income, I wonder if there's some sort of shell game here where if half the room rate is a "resort fee" that the proprietor gets to keep it like regular untaxed income with the state.

2) $20 is really excessive unless your rooms are $100+ a night. When you're doing it at even cheaper places like this, how does the customer not feel fleeced? How do you think you'll build loyalty this way? Was D's occupancy really hurting? Downtown is more popular than it's been in probably close to 20 years.

I know Derek has to run the business and make some money, but I'd be curious - how much of the booking traffic is driven by 3rd party? Much like Southwest, maybe it's time to have the best rates by booking directly, while offering the "resort fee" rate with the 3rd party booking sites.

Unfortunately, with even most off strip properties having rising resort fees these days, I'm tempted to agree with Chuckmonster's recent article that Vegas is losing it's lustre by being taken over by the CPAs and MBAs - Since I'm an East Coaster, once I've seen all the shows I wish to see and/or stay at the places I'd like to, what's to drive me to come back? I've got gaming locally which covers anything I'd like to play and living near DC, I can have the food experience of Vegas a bunch too.

@Mr Monster
I completely agree with your analogy and I dont like the fees either but with all the resources at a travellers disposal there is no reason to not be fully informed before you make your decision.

A number of properties are getting much more aggressive about touting and promoting booking on their site. I'm talking with quite a few right now about promoting/listing their stuff directly for commission or placement fee instead of the wholesaler we've used for years.

In the past, the wholesalers actually bought blocks of rooms at discount then turned around and sold them for whatever they could get for them. The hotel didn't have the pressure of having to fill the room and if it went empty for the night, the wholesaler ate the empty room.

Good luck to properties relying on things like MyVegas and social media to really put heads in the beds. Only a small fraction of a property or hotel group's potential guests follow their social media or play their games. AND... those people tend to be Vegas fanatics who already know how do drill down and get the best rates, comps, etc.

Also, the property still has to get them in the door and get a players card in their hand before they market to them that way.

They still either need the wholesalers or they need to make it really, really attractive for Vegas new media to promote what they offer. Which them seem like they are starting to do.

Resort fees do cut out a number of people: Sites who get commissions make less. The LVCVA makes less (on the room tax fee).

@skyontherocks Properties (whether the owner or social media team or a casino host) don't reach out to Vegas sites, bloggers, and podcasters because they are magnanimous. They do it because the more free publicity and loyalty they squeeze out of our readers/listeners/followers, they less cold hard cash they have to lay down for advertising. Pat new media on the back, validate them, and you save thousands (if not tens of thousands) in advertising costs. It is simply a great ROI.

BTW, this isn't an indictment of Stevens. I believe he truly is a VIM fan. But he's also a very astute businessman on all levels.

@AccessVegas It's always nice when something you really like or want to do is also good business.

Call me dumb, but why can't hotels, and airlines for that matter, just advertise what it is going to cost me to stay, or use, their stuff?

The room is $22
The resort fee is $20
and the taxes are (shit knows) say $7
total for that night $49

Why can't their website, or Expedia or whomever just say the room is $49 a night.

I advertise my drink prices at work tax in so people know exactly how much to pay the bartender when they order....it just makes life easier.

I think I may be naive for thinking this way tho.

In my blind hatred of resort fees, I overlooked that The D and Golden Gate's $20 fee is almost 100 percent of the room rate on some nights (thanks @jinx, @mattk, et. al).

There's no way you're going to sneak a 70-to-90 percent nightly fee past the uninformed masses without many of them abandoning the hotel purchase and instead complaining about it on Yelp or TripAdvisor, lowering that hotel's online rankings.

Though I like both properties' casinos, it's really hard to consider either hotel a "resort." If anything, Derek Stevens should have called it a communication fee, not a resort fee.

I tend to not pay any attention to resort fees because I have gotten used to them. That said, if any hotel wants to throw in 2 free drinks at their bar as part of what i am going to get while staying there I would be cool with that or a free bathrobe or something. I cannot blame Stevens for joining the rest of the club though. He is there to make money.

Spyder asked, "Call me dumb, but why can't hotels, and airlines for that matter, just advertise what it is going to cost me to stay, or use, their stuff?"

They can. But they won't unless they're all FORCED too. That's what happened to the airlines -- the Dept of Transportation handed down new rules requiring the airlines to show "total pricing" -- all taxes, fees, etc. included in the first-page price.

No airline -- or hotel -- is going to do this unless they're forced too. The first one(s) to do it are at a competitive disadvantage. All of the sudden, their prices look higher, even if they're not.

The DOT has a lot of control over the airline industry, so total pricing enforcement was doable. I don't see how it's enforceable on hotels and third-party booking sites. No governmental agency has that much authority over them (the FTC maybe, but that's a stretch) and so I don't think it will ever happen.

Getting to the top of expedia/travelocity's listings is a big reason for this. But I'd also like to know, as a previous commenter asked, what are the tax repercussions of this shift? If yesterday The D charged $40/night, and today it charges $20/night + $20 resort fee, how much money does the city / county / state lose on that deal in tax revenue?

I'd think the city (for downtown properties), Clark County, and Nevada would want to look into this and perhaps make some changes to the tax code, if in fact this RF shift is costing them money.

Minvegas and Accessvegas hit a point, that I'm curious about and would like to see Mr. Stevens asked during the interview. Are the resort fees subject to the same level of corpstate taxes as room rates? I'm not how much he'd be able to advise on it, without it possibly getting him in trouble, but I do believe that part of this is an end around for continuous higher corporate tax rates from the state.

Just too add too, I'd also like to advise any resort charging a resort fee, that even showing some value for the fee would be beneficial and likely to keep people on the property longer and utilize things they typically are giving away anyway. Free drinks or bottled water come to mind. My suggestion is make it 2 drinks per night of the stay.

Works to keep people on the property, it's unlikely that all are going to use it during their stay and at the very least, and there is a portion of your clientele that isn't going to feel like they are getting nothing for their dollars.

Free wifi is nice, but with it becoming more common, it's not that big a perk. Part of this resort fee issue for these hotels is they've done an awful job on the PR side of it. They've worked to create a laundry list of junk in most cases, where some basic analysis would have allowed them to come up with a far superior list.

^^ Yep. What would it cost to have the maid leave a couple of spring waters every day after cleaning? Almost nothing. And why not include a $10 daily dining credit for in-house restaurants? That would encourage me to eat breakfast at the hotel cafe daily rather than heading elsewhere.

At least try to pretend that it's not just a MONEY GRAB!

Just did a little research on the CT casinos, Foxwoods and Mohegan Sun..both have resort fees of $13 a day..Foxwoods gets you two bottles of water, fitness club access, and transportation between buildings (the trek to MGM Foxwoods is a hike, along with free local calls...Wouldn't have an issue with Foxwoods, cause I'm getting something of value that I would use..

Many of us remember that this stuff started years ago as ''Energy Fees'''...The Stardust started charging around $5 a day for water and electricity costs...no one noticed, or likely said anything, and now we've gotten to this point in time, where its too easy for an operator to tack resort fees on since they know many people won't notice, or care...

I understand that if you have a room comp (which I assume would be a large % on this board) then the RFee is waived.

My question is do you still get the perks (wifi/calls)?

When CET first instituted their RFee last year my first trip (to Paris, on a comp) the internet was waived. I called down and was told that I would see the internet charge on the tv but that it would be cleared each night - it was.

On all future trips I was informed that my RFee was waived BUT that if wanted wi-fi for example, you had to pay extra for it. This pissed me off more than anything else - you're a good customer but you can't have the benes we give everybody off the street.

So is the high speed wi-fi and local and 800 calls comped to people with comped rooms at the D and GG?

Vegas Gang just finished talking to Derek about resort fees. He's read this post and all the comments and answered a great majority of concerns. He also mentioned that Resort and other add on fees are taxed exactly the same as room revenue.

The episode should be posted later this afternoon at VegasGangPodcast.com

I will be posting our talk with Derek soon. Some interesting details and answers to questions above. I leaned a few things.

Here's the kicker in regards to The D and Golden Gate including free WiFi in the resort fee. Downtown Vegas, including the Fremont Street area, is going to have free WiFi in the near future and is in the process of being rolled out (or may be active but still in the testing phase). If said WiFi signals can be reliably connected to from one's hotel room, it kinda eliminates the need for hotels to provide WiFi, free or paid. When I stayed at Vdara a few months ago, the free WiFi that was included in the $25/day ($28/day when tax was added) was painfully slow and useful for checking emails and streaming audio. If you wanted faster speeds, you had to pay for it.

The Plaza wasn't the first Downtown property to charge a resort fee; the Gold Spike was, and since the Gold Spike was a minor player, it never got much play. Even when the Plaza enacted one, it didn't cause much of a stink because most people just don't give the Plaza much of a thought.

One thing about the Downtown WiFi though is that it's going to be very slow (1mbps, slower than LTE) and they are blocking sites like YouTube... so it's really a barebones solution. Perhaps fine for some folks but not really a complete solution.

Our talk with Derek is now available here:

http://www.vegasgangpodcast.com/2013/08/vegas-gang-93-august-9th-2013/



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