Are ‘entertainment fees’ and ‘resort fees’ just a way for hotels to jack up their rates?

An exterior view of the Golden Nugget in downtown Las Vegas on Sunday, Jan. 20, 2013.

Golden Nugget officials say there’s a valid reason behind their decision to add a $5 nightly fee to customers' bills. The casino-resort is calling the charge a "Fremont Street Experience fee."

Vice President of Marketing Amy Chasey said it is necessary to offset growing operational costs.

“It’s just like running an average household,” Chasey said. “Rates go up. Electricity goes up. Housekeeping goes up.”

But Chasey contends the Fremont Experience fee is not a “resort fee.”

Because there are significant costs associated with maintaining the Fremont Street Experience, Chasey said, it seemed like a better idea to roll out a nominal $5 fee attached to the entertainment outside the casino-resort rather than a $25 resort fee or higher room rates.

“[The Golden Nugget] pays this significant fee for the experience,” Chasey said. “Rather than raising our rates, we went this $5 fee.”

But others in the industry say calling the charge an entertainment fee is disingenuous. They say the Golden Nugget and other resorts that add ancillary fees are only disguising higher room rates.

Many casinos try to keep their rates low to appeal to travelers who book rooms on sites such as Expedia and Priceline. Most users search for rooms using the sites' lowest-to-highest-price sorting feature.

Keeping room rates low, then adding extra fees that don't show up until a booking is almost complete, allows hotels to appear higher on the sorted list, making them more likely to be selected by travelers.

A downtown casino operator who wished to remain anonymous said the difference between landing on the first page of the search results and the second can mean thousands of dollars.

Resort fees are the hotels' out, said Bill Maloney, founder of FeeZing, a travel website that warns travelers about hidden fees.

“Resort fees are a way for a hotelier to get control of their assets,” Maloney said. “It’s a way for them to have deceptive low rates.”

Resort fees rarely are rolled into advertised prices on travel booking websites. More often, they are presented in the bill customers receive at the resort. Most travel websites don't disclose the fees until a traveler clicks “Book.”

The Federal Trade Commission calls the process “drip pricing,” which the agency describes as a “technique in which firms advertise only part of a product’s price and reveal other charges later as the customer goes through the buying process.”

Many travel experts are critical of how resorts handle fees.

“It’s possible to make money by lying, but it’s wrong,” said Christopher Elliott, a consumer advocate with National Geographic Traveler. “They’re lying.”

The Golden Nugget’s new fee has many travelers grumbling.

Several disgruntled customers hopped onto the casino’s Facebook page shortly after to express their disappointment after news broke of the fee.

“Thanks for kicking your guests in the groin with a bogus mandatory fee,” Sam Novak wrote. “This is, by and far, the opening of Pandora's Box for downtown.”

Six “likes” supported the rant.

“Big mistake with the resort fees,” posted Erica Giraud, who received five “likes” from fellow Facebookers. “Very sad you guys have chosen to do this, as it will now open up the whole downtown area to these fees. Way to go.”

The Golden Nugget recently conducted a survey of casino guests asking if they want a resort fee. The results weren’t surprising.

“The reality is they don’t want any fees,” Chasey said. “But we had to do something.”

To stay competitive in the recovering Las Vegas market, it made more sense to activate a fee rather than raising room rates, Chasey said.

“I would not be shocked if more downtown properties began charging fees in the future,” Chasey said.

The Fremont Street Experience is collectively funded by six properties: the D, Golden Nugget, Binion’s, California, Golden Gate and Fremont. Each pays a monthly due to cover operation and entertainment costs for the Fremont Street Experience. All of the casinos involved generally pay the same dues.

Tom Bruny, a spokesman for the Fremont Street Experience, said the dues have not increased in quite some time. He would not say how much each casino pays.

Increasing costs and competition has sparked a ballooning resort fee trend.

Caesars Entertainment rolled out a $25 resort fee earlier this year after years of marketing “no resort fees.” Several other resorts followed, including the South Point.

Chasey contends that the Golden Nugget's new charge isn't a resort fee.

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