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Gaming Guru

Tim O'Reiley

MGM Resorts adding new options, fees

24 February 2011

LAS VEGAS, Nevada -- Would you plunk down $30 to guarantee that a king-size bed would be waiting for you in Las Vegas?

Although mandatory resort fees have spread among many Las Vegas resorts during the recession, MGM Resorts International has quietly added several options in recent weeks. Besides the bed fee, which allows guests at Mandalay Bay their choice of a king or two queens, MGM now lists differing surcharges for differing check-out or check-in times at several properties and has extended the resort fee to the Bellagio for the first time.

But a $20 charge to guarantee a nonsmoking room at the MGM Grand Las Vegas was quickly snuffed out after it threatened to billow into a public relations fiasco.

"These options provide yet another tool for us to personalize the guest experience, according to each guest's individual preferences," MGM officials said in a statement. "We're receiving some very positive feedback from guests."

Not all of the MGM hotels have the new fees. The ones put into effect vary by property.

But some industry experts wonder whether that will lead the hotels down the same runway as the airline industry, which has become a lightning rod of consumer antipathy for charging extra for everything from checked baggage to food to seat assignments.

Some hotels around the country have listed extended time fees, said Bobby Bowers, senior vice president at Smith Travel Research. Such options largely disappeared during the tight economy.

However, Bowers added, "I don't think I've seen a bed size fee before. It's hard for me to fathom. I think there is definitely the danger of people feeling nickeled-and-dimed for everything they do."

Despite the complaints directed at airlines over what management terms unbundling or a la carte pricing, the extra revenue has contributed to the industry's best profits in years. Many airline executives go out of their way to highlight fee income in Wall Street presentations.

Starting in the current quarter, MGM told gaming industry analysts that it would create a separate line item in its financial reports to show the revenue that comes from the resort fees. That comes against a backdrop of Las Vegas room rates falling 22 percent since 2007, a source of concern to securities analysts, and only recently started to rebound.

MGM acknowledges that some guests might not care about bed size, but others could find them "very important features that can make or break the vacation experience. Guests enjoy the option to guarantee these amenities and leave nothing to chance."

Industry consultant Randall Fine of the Fine Point Group said the latter factor distinguishes the hotel fees from their airline counterparts.

"The airlines took away things that were free and then started charging for them," he said. "But the hotels are offering a service they don't now. How many people leave town on red-eye flights and would like extra time in their rooms?"

On the other hand, Caesars Entertainment has made a point of marketing itself as fee-free and will stay that way.

"When we quote a room rate, that's what people pay," said spokesman Gary Thompson. "We don't believe it's in the interest of customers to charge for things they may not use."

Resort fees began to pop up on hotel bills about a decade ago and brought the industry a black eye because they often were not disclosed until guests checked out. Litigation in Florida led to them being listed up front, said Joseph McInerney, CEO of the American Hotel & Lodging Association.

But the new generation of fees started appearing after MGM finished installing the necessary software. Potential guests must check them to add them to the bill.

What quickly drew the attention of anti-tobacco groups was the $20 the MGM Grand charged for the guarantee of a smoke-free room.

"In typical Sin City logic, the MGM fee punishes good behavior and rewards your vices," wrote Christopher Elliot, the ombudsman for National Geographic Traveler magazine. "Instead of paying extra to smoke in your room, you'll be asked to shell out more to be shielded from cancer-causing fumes."

MGM then dropped the nonsmoking fee.

"We regret having implemented this policy before recognizing the inappropriate message it might have sent to some of our customers," MGM spokesman Alan Feldman said in a statement.

Instead, the hotel cannot provide everyone their expressed preferences, much as airline passengers can be stuck in the middle seat on crowded planes.

But with the lodging industry recovery still in its early stages, said Bowers, "I think continuing to sell value is the way to play it."
MGM Resorts adding new options, fees is republished from