Junk mandatory resort fees

12 March 2023

It’s not very often I provide free advertising, but my friendly neighborhood arcology could apparently use it.

The Nugget Casino Resort in Sparks has a problem — OK, it has more than one problem, but both the beleaguered editors of The Nevada Independent and you, our plucky reader, would prefer me to keep under a Russian novel-length word count for my weekly columns, so let’s focus on one problem for now.

The soon-to-be buyers of the Nugget want to be reassured that the property and resort they’re buying will return enough value to their pocketbooks — which are hopefully not deposited at Silicon Valley Bank — to make the purchase worthwhile. Meanwhile, the sellers of the Nugget want to demonstrate how valuable the property is to ensure the buyers don’t welch on that $195 million sale price.

The problem, however, is this: Interstate 80, the primary freeway connecting Reno to California, is cut through Donner Pass. 

Which, yes, is named after the Donner Party.

You know the story. Pioneers tried to trek through the Sierra Nevadas, got caught in a snowstorm, then resorted to cannibalism to stay alive. Drivers traveling between Reno and Sacramento pass mere yards from where the Donner Party’s ill-fated winter campsite was located.

Unsurprisingly, subsequent travelers remain consistently hesitant to travel through that pass during the winter, even with all of the creature comforts modern automobiles might bring, and for good reason. Even with mechanized snow plows working around the clock, Donner Pass is frequently closed during inclement weather due to low visibility, ice and spinouts. If a traveler is really unfortunate, the pass is closed while they’re still driving to the pass. When that happens, a two- to three-hour drive can suddenly turn into an impromptu traffic jam-shaped campout.

Consequently, if you’re running a hotel-casino in Northern Nevada, the challenge is finding a way to make payroll and keep the lights on during the winter months, when travelers prefer to avoid the inherent headaches involved in winter travel to your properties, so you can make bank when the snow melts and people return in the summer. This was admittedly easier in the 1960s and 1970s when Nevada had a near-monopoly on casino gambling — that, incidentally, was also the time period when John Ascuaga’s Nugget built the two towers that continue to dominate Sparks’s skyline today.

Fast-forward five decades (sorry, older readers) and those two towers still stand and are still open for business, which is more than can be said for many of the other properties developed in Reno and Sparks during the same era. Most of the Nugget’s contemporaries have either been converted into condominiums, as the Flamingo was before 2008, or just abandoned outright, as the Sundowner and Bonanza Inn remain today. 

Even Harrah’s Reno, the former flagship and founding property of the portion of Caesars Entertainment that used to be called Harrah’s Entertainment, is now being converted into, among other things, graduate student housing for University of Nevada, Reno President Brian Sandoval’s growing empire.

Point being, the Nugget has been open for business through many a Northern Nevada winter and, unlike its competition, has survived them all. Neither snow nor rain nor heat nor gloom of night prevents the Nugget’s twin towers from making some corporate entity somewhere some gross revenue. The key is to somehow convince enough warm bodies in California to make the cold trek through the Sierra Nevadas.

The obvious solution is a little old school with a modern twist — simply price the hotel rooms as apparent loss leaders, then add a mandatory resort fee to make the margins back. Think “$9.99 Prime Rib Night” with a mandatory $35 “hospitality fee” and 18 percent gratuity added to the total when you get your bill:

Screen grab of the resort fee information for the Nugget Casino Resort, taken March 11, 2023.

Screen grab of the room rate taxes and fees for the Winter Deal Sale promoted by the Nugget Casino Resort, taken March 11, 2023. The selected date of stay was March 21-22.

Suddenly, what was once a “$34.39 per night” room turns into an $85.71 per night room after a $2.00 “Tourism Surcharge Fee” (this is actually a local tax), a $4.95 “Merchant Fee,” and a $35.00 Resort Fee — all of which added together more than double the price of the hotel room. Consequently, if you’re a price-conscious visitor and you’re quickly comparing the Nugget to, say, Motel 6, you might choose the Nugget’s “$34.39 per night” room over Motel 6’s $49.49 nightly rate for a similar room — but end up paying nearly twice as much:

Screen grab of the room rate taxes and fees for a comparable room at the Motel 6 near the Reno Livestock Event Center, taken March 11, 2023.

If you think, as I think, that this is all a little deceptive and ridiculous, I have bad news — we both have something in common with President Joe Biden, who spent some time railing against resort fees in his State of the Union address last month.

On the one hand, I’m a little irked that, owing to Biden’s highlighting of junk fees, the politics of whether a business should be able to engage in drip pricing has likely joined the all-consuming Moloch of two-party Culture War that defines national politics these days. 

An unfortunate side effect of a president expressing opposition to something is the opposing party must come out in favor of the thing, whatever it might happen to be, no matter how ridiculous it might otherwise seem to favor whatever that thing is — and so the God-given, constitutionally protected right for hotels to lie to customers about the actual prices they charge for their rooms is likely now a foundational part of some political party’s platform somewhere.

Relax, Republicans — I’m talking about Rep. Dina Titus (D-NV), who swore resort fees, at least when applied to resorts in Las Vegas (observed), are a necessary cost of doing business in her district.

On the other hand, as noted blogger and journalist Matthew Yglesias pointed out, there’s a significant difference between a resort fee and, say, a parking fee or an airline luggage fee — namely, you can’t decline them by declining the additional service. 

Want to avoid a casino’s parking fee? No problem — just don’t park a car there. Use a bus, taxi, rideshare, a bicycle, or your own two feet to get around. 

Don’t want to pay an airline luggage fee? Fine — pack light.

Want to avoid a resort fee? Stay home — or learn to pitch a tent.

Given that, why don’t hotels simply take their existing hotel room rate, add the resort fee to it, and call that their new room rate? It’s not like they charge a “bed fee,” a “shower fee” and a “heater fee” — those are all accurately viewed as services one expects to find in a hotel room, so charging separately for them would be nonsensical.

The answer, contrary to popular belief, is not tax evasion, at least not in our state. Both Clark County and Washoe County are quite clear that resort fees are every bit as taxable as the room rate. In Clark County, both the room rate and resort fees are “rent” since, being non-optional, they’re both charges that would normally be part of the room rate. Washoe County, meanwhile, simply taxes the sum of the gross receipts, regardless of how those receipts are billed to the customer.

Instead, according to the hotel industry, they’re doing customers a favor — provided, of course, that customers are booking directly with the hotel, which rather gives the game away. Resort fees, you see, aren’t tax evasion — they’re commission evasion mixed with a healthy dash of search engine optimization. 

Since the most popular search engines only show the room rate, not the total rate, hotels game their search engine results by displaying an artificially low room rate online. Then, once customers start the process of booking a room, they hope customers will choose to give a credit card number once they see the inflated final total, plus mandatory resort fees, instead of restarting the room booking process to find a cheaper room.

You really think hotels would do that? Just go on the internet and tell lies? Well, yes, and they’ve been doing it for years.

Unfortunately, due to the toxic nature of our federal political system, we’re unlikely to see any satisfactory attempt at compelling hotels and resorts to tell the truth about what they’ll require their customers to pay out of the gate. Fortunately, we do have a state Legislature — and they’re in session. Perhaps it’s time for Nevada to expand its “gold standard” regulation of the gaming industry to include gold standard transparency in mandatory room rates as well.

David Colborne ran for office twice. He is now an IT manager, the father of two sons, and a weekly opinion columnist for The Nevada Independent. You can follow him on Mastodon @[email protected], on Twitter @DavidColborne, or email him at [email protected].

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