The hospitality industry of today is strong, with high occupancy and rates expected to color the majority of 2016. And what happens when the hotel business is doing well? Fees go up.
MGM Resorts, owner of 12 properties on the Las Vegas Strip, is striking out with a big fee scheme the likes of which the city has never seen before. MGM is becoming the first major casino company to charge visitors for parking, a decision that is nearly guaranteed to generate millions of dollars in annual fees from travelers to the city.
While this initially seems like a risky move for an industry that just recently began to stabilize, Yahoo News reported that MGM was also the creator of the "resort fee" that is now a standard part of guest checkout receipts across the Strip and beyond, with a large swath of the industry adopting similar fees in the wake of its success.
MGM has 37,000 parking spots at resort casinos in Las Vegas that include Mandalay Bay, Delano, Luxor, New York-New York, Aria, Bellagio, The Mirage and MGM Grand.
"The pricing is going to be modest. It will not exceed $10 a night for self parking," Clark Dumont, a SVP of MGM Resorts, told The Los Angeles Times. Dumont did not reveal how much guests can expect to pay for valet parking, though it is expected to come at a premium.
Could parking fees be the new normal? It's possible, and MGM is willing to find out. The Venetian and the Palazzo, however, told The Los Angeles Times they "have no plans to charge for parking," but spokespersons for Caesars Entertainment – owners of 10 Las Vegas properties – declined to comment.
In 2014, hotels earned $2.35 billion solely from fees and surcharges, and the numbers for 2015 are expected to be even higher. Should parking fees pick up steam, revenue from fees could skyrocket, but potentially at the cost of guest satisfaction. Las Vegas properties can get away with charging all guests for parking because of its draw as a destination, but other areas of the country may not be so fortunate.
Furthermore, a survey released at the tail end of 2015 showed that guests are all in favor of full disclosure of hotel fees. Could a parking fee discourage bookings from thrifty guests? It's very likely. For now, all eyes are on MGM.