Why Are NYC Hotels Lying About Providing Internet Services With Amenity Fees (aka Resort Fees)?

It is illegal in New York to tax internet services at hotels. This is due to the Internet Tax Freedom Act. New York makes this very clear in their information to hotel operators on how to tax various services provided at a hotel. 

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Despite not being allowed to tax internet services at New York hotels, most hotels charging a resort fee / amenity fee / destination charge / urban fee in New York City are violating NY tax law. A resort fee is a way for the hotel to lie about the price of a room. You are paying a hidden second room rate when you pay a resort fee. As you can see in the tax policies above, you sure are not paying for internet access if it is being taxed at hotel occupancy tax or NYC sales tax. Resort fees are fairly new at most NYC hotels. The number of hotels charging deceptive and misleading hotel resort fees in New York City went from 15 hotels in July 2016 to 42 hotels in July 2017 to currently 72 hotels with resort fees in January of 2018. Clearly these hotels feel no legal or moral obligation on how to advertise or tax services are provided by the deceptive resort fee / amenity fee. 

Below are a variety of examples of hotels claiming to provide internet access with their resort fee / amenity fee / urban fee / amenity fee / tourist scam fee.

The New York Hilton Midtown says their $25 "urban destination charge" provides "premium guest internet access." The Hilton Midtown currently taxes their "urban destination charge" at NYC hotel occupancy tax at 14.75%. So legally you are paying a for a hidden second room rate, not internet services. 

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The Grand Hyatt in New York City says their misleading $25 destination fee provides "high speed premium internet." The Grand Hyatt is currently not taxing their destination fee (aka resort fee) according to two phone calls to the hotel booking department made on February 4, 2018. This means the hotel could be providing you internet with the destination fee but it would be quite illegal to provide other services for the destination fee and not tax them. Also, as we have said before, New York City is already losing millions due to the hotel resort fee scam. This is just another example of a hotel contributing to massive tax revenue loss in New York City. 

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The New York Marriott Marquis says their $25 destination fee provides "enhanced internet." The NY Marriott Marquis is currently taxing their resort fee at NYC hotel occupancy tax (14.75%). So when you pay their daily destination fee, you are paying for second hotel room rate, not for internet service. 

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The Row NYC says their $30 facility fee covers "high-seed wireless internet access for unlimited devices." The Row taxes their facility fee (aka resort fee) at NYC sales tax of 8.875%. This means the city is losing the difference between the hotel occupancy tax and sales tax (5.875%) on each room in the hotel with the facility fee per night. Aside from that, it is illegal for the hotel to say they are providing internet services when they tax those services sales tax. As you can clearly see from the guidance from the state above, hotel internet services cannot be taxed. 

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Want to read the full New York Department of Taxation and Finance publication on taxing services at hotels and motels please visit this site: https://www.tax.ny.gov/pdf/publications/sales/pub848.pdf  Make sure to check out page 41.

New Yorkers Could Lose A Million Dollars of Tax Rev due to the Marriott Marquis' New Resort Fee

The Marriott Marquis in New York City added a hotel resort fee. On September 1, 2017 the hotel added a "destination amenity charge." This fee breaks the room rate into two parts. One part is the advertised room rate, the second part of the rate is hidden as the fee. This creates numerous policy issues that everyone should care about.

First and foremost, this fee exists so that the Marriott Marquis NYC can mislead customers about their room rate. Hotel resort fees allow the hotel to break their rate in two, only advertising half of the rate. The second half of the rate is disguised as a resort fee. With this split rate, the hotel will seem less expensive to tourists using comparison shopping tools like Booking.com, Priceline or Expedia. This fee is meant to deceive customers and has been called harmful to consumers by the Federal Trade Commission. Forty-seven Attorneys General started an investigation into this practice of resort fees in May 2016. Marriott refused to cooperate with the Attorney General investigation and was recently subpoenaed by the DC Attorney General. Despite this recent investigation, the Marriott brand took a stand by adding these misleading and deceptive hotel resort fees to their largest property in New York City. 

These fees do not just lie to tourists, they also cheat New York City. New York City gave a directive in 2012 that hotels should tax hotel resort fees as a second room rate (as they are) at hotel occupancy tax of 14.75%. Most hotels do not follow this and instead tax the second hotel rate (the resort fee) at 8.875%. That means that a room that previously cost $225 was taxed at a rate of 14.75%. Now, with this split room rate policy, the hotel will tax a room advertised at $200 14.75% but the other part of the room rate, the $25 destination amenity charge, will only be taxed 8.875%. The Marriott Marquis has 1,949 rooms. This means that New York City would lose $1.47 per night per room every single day that the Marriott Marquis charges this scam fee and follows the tax path of most NYC hotels. That is $1,045,735.95 per year. This scam fee does not just cheat tourists, it could cheat New Yorkers of over one million dollars of tax revenue per year. 

The hotel resort fee at the Marriott Marquis in New York City has even further policy implications. These scam fees are meant to confuse tourists. Tourists cannot figure out what a room rate even costs. This confusion leads them to hotel alternatives like Airbnb and HomeAway where the process is standardized throughout the world. Resort fees and destination amenity charges directly drive tourists to home shares.

In addition, travelers at the Marriott Marquis NYC will likely think this 25 amenity charge is actually paying for services in the hotel. It is not. The fee is simply a hidden part of the advertised room rate. Because tourists think they are paying for service, they are less likely to tip housekeepers. Housekeepers should be tipped. The hotel that employs them should not be actively working to add policies that reduce the number of tips they receive. 

New Yorkers deserve more than a hotel that works to confuse tax policy potentially cause one million dollars of tax revenue per year. Essential services are so needed at this time of year and it is sad to see the Marriott Marquis NYC decide on a dishonest pricing policy that can cheat New York of the revenue that could be used to help the homeless, pay the police and keep affordable housing programs thriving It's time to ban the hotel resort fee scam. 

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The Marriott Marquis in New York City has split its room rate potentially causing a one million dollar loss of tax revenue to the city. Photo Credit: Marriott Marquis NYC

The Largest Hotel In New York City Adds Deceptive and Misleading Resort Fees + Scams New Yorkers

The Hilton Midtown, the largest hotel in New York City at 1,979 rooms, has decided to start adding deceptive and misleading hotel resort fees in November 2017. They are calling their resort fee an "urban destination charge." This means that instead of listing one hotel room rate as the hotel had always done before November 22, 2017, the hotel rate now has two parts. Since the hotel room is now split into two, that means that one part of the room rate is advertised and the other part of the room rate is hidden as an "urban destination charge." 

The hotel resort fee has long been a controversial charge by hotels. Hotel resort fees are currently under investigation by 47 Attorneys General. The Attorney General of DC subpoenaed Marriott Hotels on June 6, 2017 over this investigation due to their refusal to hand over documents to the investigation. Resort fees have been determined by the Federal Trade Commission to be detrimental to consumers. Still, these hotel fees allow hotels to lie about their advertised price. The fee breaks a hotels room rate into two parts and only one part is advertised. Hotels like to look like they are cheaper than they actually are, so the number of hotels charging hotel resort fees in New York City has more than tripled since May 2016. 

Hotel resort fees are not just an issue for tourists to be concerned about in New York City. These hotel fees have massive tax implications for New York City. In New York City many hotels have ignored a city tax directive to tax hotel resort fees as a second room rate at full hotel occupancy tax of 14.75%. Most hotels in New York City are only taxing their hotel resort fees at the lower sales tax rate of 8.875%. This causes a 5.875% tax loss from each resort fee per room per night. 

For more detail, the Hotel Occupancy Tax in New York City is 14.75%. NYC sales tax is much lower at 8.875%. Until November 2017, the entire room rate at the Hilton Midtown was taxed 14.75%. After November 2017, the hotel is splitting their price in two. If they chose to go the way of most hotels in New York City, the first part would be taxed 14.75%, the second part (the "urban destination charge") would only be taxed 8.875%. So if the advertised rate is $200 and the urban destination charge is $25 the total price of a room is $225. New York City prior to November 2017 was collecting $33.18 in taxes on a $225 room at the Hilton Midtown. Now with their "urban destination charge" the city is only collecting $28.17 ($200 x .1475 = $29.5) + ($25 x .08875 = $2.22) and 29.5 + 2.22 = $31.72. So the city loses $1.47 in taxes per room per night on a $200 room. That would be a lot of tax loss for the largest hotel in New York City with 1,979 rooms. 

You can calculate this out by seeing what the resort fee would have been at hotel occupancy tax and seeing what would be now if they go the way of most hotels in New York City and charge the lower NYC sales tax. The resort fee at the Hilton Midtown is $25 so previously the city would get $3.69 from that (25 x .1475) when the fee was part of the room rate as it was previous to November 2017. With a resort fee the City gets less (25 x .08875), $2.22. That's a 1.47 loss per room per night. At full occupancy, that is a $2,909.13 tax loss to the City per day. That's a $1,061,832.45 tax loss to the city per year. It is sad to see the Hilton Midtown engage in a policy that leads to such a massive tax loss across New York City. Tax revenue is essential to keep the city going. Hilton policies like resort fees could lead to over a million dollars lost that could have funded the subway, affordable housing, public safety and a million other great things that protect and make New York great. 

Not only do hotel resort fees cheat New Yorkers and the tourists who stay at the hotels, they cheat the people who work in the hotels as well. When tourists are charged bogus hotel resort fees like this urban destination charge, the tourists in the hotel are less likely to leave tips for the house keeper. They think these fees cover housekeeping tips. These fees have absolutely nothing to do with housekeeping or any service in the hotel. These fees are simply part of the room rate split off so that the Hilton Midtown can lie about their advertised price to lure in customers, potentially cheat New York City of over a million dollars of tax revenue per year and even hurt their own house keepers who will be less likely to see tips after the implementation of this fee. 

When people think hotel resort fees are just a tourist issue, just think about how this one hotel could cause New York City to lose over a million dollars a year in tax revenue. 

 This is a lovely photo of New York City's biggest hotel, the Hilton Midtown. Photo credit: Hilton Hotels

This is a lovely photo of New York City's biggest hotel, the Hilton Midtown. Photo credit: Hilton Hotels

Detroit, Resort Fee City?!?

When you think of hotels that should have something called a "resort fee" do you ever think of the city of Detroit? No. You don't. That of course does not stop the hotels from adding second hidden room rates aka resort fees as standard in the way they operate in Detroit. This is offensive for two reasons. 1) Detroit is an awesome city, but it is not a resort city 2) No one in Detroit appreciates their hard earned money being driven into scams

There are not that many hotel rooms in Detroit. That is changing quickly but there are currently only about 3,500 hotel rooms in the City of Detroit. So why are 507 rooms in the city subject to a scam resort fee? That's about 15% of the hotel rooms in Detroit. Seems pretty steep for a city that values honest hard work. 

WHAT DETROIT HOTELS ARE BOLD ENOUGH TO CHARGE SCAM HOTEL RESORT FEES?

THE MGM DETROIT at 1777 3rd Ave, Detroit, MI 48226
     
ROBERT'S RIVERWALK HOTEL at 1000 River Place Drive, Detroit, MI 48207

Is there a tax issue in the City of Detroit? 
No. Hotels have the option of taxing the resort fee / second hidden room rate at the sales tax rate or the hotel occupancy tax rate. They say that the resort fee is an exchange of service (it is not since it is mandatory) so sometimes they tax only the sales tax. Other times, hotels realize themselves this is a lie and tax it as they would a second hotel room, at the hotel occupancy tax. Both the MGM Detroit and the Robert's Riverwalk Hotel tax their resort fee / hidden second room rate at the Detroit hotel occupancy tax. Though they say this is an exchange of service for the use of the Keurig (no joke, that's in the MGM Detroit's alleged resort fee services) we all know it is not. At least the MGM Detroit and the Robert's Riverwalk Hotel recognize that they are charging a scam second hotel room and it is being taxed according to the City of Detroit hotel occupancy tax of 15%. 

Is there an honesty issue with hotels charging resort fees in the City of Detroit? 
Yes. Detroiters work hard to earn money and when they spend their money, they want to spend it at businesses that are as honest and hardworking as they are. There should be one advertised price for hotel rooms in the City of Detroit - not one advertised and one hidden price. 

What issues are resort fees causing that are unique to Detroit?
Detroit is about to have a hotel boom. If 15% of the hotel rooms already charge scam resort fees, what is stopping all of the new hotels that are going up from charging similar mandatory hidden fees? Nothing. Hotels in Detroit are currently free to advertise $1 rooms and have a $100 resort fee. Resort fees confuse tourists and leave them feeling like they were scammed. Is that something the burgeoning Detroit travel scene wants to have its' travelers experience? No. 

NYC Loses $8,826,397.21 Per Year Due To Hotel Resort Fees

New York City has seen an incredible explosion in hotels charging resort fees in 2017. In May 2016, fifteen hotels in the City charged resort fees. Today in July 2017, a whopping 42 hotels in New York City charge scam hotel resort fees. This 180% increase has drastic implications for the fair collection of taxes from New York City hotels.

What is a resort fee? A resort fee is a separate not advertised, mandatory fee that a guest is forced to pay in order to receive the key to his room. This fee is charged at the hotel in addition to the base advertised room rate. In cities like New York, it is often called a “facility fee” or an “urban fee.” 

Hotels claim a resort fee provides a service, alleging that it goes to pay for things like access to the business center or local calls from your room. However, there is no exchange of service with a resort fee. If there was, a guest could deny the charge if he did not want to use the services allegedly provided. A guest can never deny the services and get out of paying a mandatory hotel resort fee. Since a guest is forced to pay the fee, resort fees are the equivalent of a second room rate. Basically, hotel resort fees allow the hotel to lie about their advertised price, so hotels love them. Hotels can use resort fees to lure in customers who think they are booking a much lower rate than they actually are. It also allows hotels to pay less in taxes since they are splitting their room rate into two parts.

How does it work? The forty-two hotels in New York City with resort fees advertise one low price, say $100. In reality, to get the key to his room, a hotel guest will be forced to pay an additional say $35 per day that the hotel considers a resort fee. This allows the hotel to lie about their advertised rate – they can say it is $100 instead of $135 dollars – and it also allows the hotel to cheat the City of New York out of essential taxes. The advertised room rate of $100 is subject to the hotel occupancy tax of 14.75%. The $35 second room rate / resort fee is only subject to the NYC sales tax of 8.875%.

How much money is the City of New York loosing per day on this hotel scam? $24,181.91 per day. That’s $169,273.37 per week. $677,093.48 per month. In total, New York City loses $8,826,397.21 in tax revenue per year because of the hotel resort fee scam. 

How is the City losing more than 8 million dollars a year in tax revenue because of the hotel resort fee scam? Hotels want to be able to lie about their advertised room rate to lure in customers. When a few bad hotels start this atrocious practice, others quickly join so that their room rates are close to their competition. With 42 hotels in New York City now engaged in this questionable practice, there are massive consequences to tourism and taxes in New York.

Tourists are confused and offended by hotel pricing and are turning instead to home shares like Airbnbs. Many local governments have taken up regulating Airbnb as they should. Yet to regulate Airbnbs and not address hotel resort fee scams that drive tourists to home shares is hypocritical. Hotel resort fees directly contribute to the problem of proliferating home share popularity. Resort fees also allow hotels to cheat the city of essential tax revenue that could be used on affordable housing initiatives. Any city considering regulating home shares like Airbnb needs to address the hotel resort fee issue in the same bill. To ensure fair is fair, and that the city gets the units and taxes deserved for affordable housing, both home shares and hotels should be taxed, advertised and regulated similarly. 

Hotel resort fees federally fall under the purview of the Federal Trade Commission (FTC). Seeing as President Trump earns $66,168 per day on hotel resort fees from three of his hotel properties, it is highly unlikely there will be any federal action on this issue. In good news, 46 state attorney generals have joined together to investigate hotel resort fees. This is multi-state litigation that could take years. In the meantime, cities like New York are losing tax revenue every single day. Local governments need to take action now to end this scam and make sure they are getting all the tax revenue they deserve to support essential city programs.

How does this work scam work exactly? In short, hotel resort fees allow a hotel to break up its room rate into two parts. One is advertised, one is not. The advertised rate is subject to the hotel occupancy tax of 14.75%. The second hotel rate, that the hotel calls a resort fee, is only subject to the NYC sales tax of 8.875%. The city is losing 5.875% of taxable revenue on every second hotel rate / resort fee in the city. In a city the size of New York, this quickly adds up to over 8 million lost dollars a year.

For a more detailed look at how hotel resort fees cheat taxes in New York City, note that there are five components to how a New York City hotel room’s advertised rate must be taxed to reach 14.75%.

1) NYC Hotel Room Occupancy Tax Rate -  $2 per room + 5.875%

2) New York State Sales Tax for Hotels – 4%

3) New York City Sales Tax for Hotels -  4.5%

4) MCTD (Metropolitan Commuter Transportation District) sales & use tax – 0.375%

5) New York State Hotel Unit Fee (aka Javits Center fee)  - $1.50 per unit per day

All combined, hotel rates in New York City should be taxed at 14.75% per day plus $3.50. That is clearly the law and that is how hotels have been taxed for quite a while in New York City. With creative new hidden second room rates / resort fees, hotels are now able to split their price and only pay the hotel occupancy tax on the advertised rate. The second half of the room rate, the hotel says, is not subject to the hotel occupancy tax since they claim it is providing a service (though, as we clearly know, it is not).  So what is the second half of the hotel’s room rate taxed at? The New York City Sales Tax of 8.875%. How?

1) New York State Sales Tax for Hotels – 4%

2) New York City Sales Tax for Hotels -  4.5%

3) MCTD (Metropolitan Commuter Transportation District) sales & use tax – 0.375%

The $3.50 – the Javits Center tax fee of $1.50 per room and the hotel occupancy base of $2 per room – is moot as that is being charged once per room. By advertising one rate but charging yet a second room rate / resort fee when a guest gets to the hotel, 42 NYC hotels that charge scam hotel resort fees also eliminate 5.875% of taxes off of the split off cost of every room. 

For example, The Hudson Hotel in Manhattan has a room on July 30, 2017 advertised for $120 per night. When a guest gets to the hotel, she will learn the hotel also has a facility fee / resort fee of $29.95 plus tax. The hotel’s total advertised room rate should be $149.95 but they are able to reduce their advertised cost by 20% by charging a scam resort fee. That’s an immoral and deceptive consumer practice to begin with, yet the hotel is also clearly working to cheat New York City out of taxes.

If you click for further information before booking, you see that the $120 is subject to the hotel occupancy taxes of 14.75%. There is also a surprise un-advertised resort fee whose pre-tax value is 29.95. The facility fee / resort fee / second room rate is only taxed at 8.75% and the city is collecting $2.66 off this $29.95. In reality, the 29.95 should be part of the advertised room rate ($120 + $29.95, so total taxed advertised room rate should be $149.95). 

The Hudson Hotel is cheating the City of New York out of $1.76 on each hotel room booked.  The Hudson Hotel has 1,250 rooms. The City of New York is losing $2,200 from the Hudson Hotel per day. That is $15,400 per week, $61,600 per month and $803,000 per year – from just one hotel – that the city is losing in essential tax revenue due to scam hotel resort fees.

The Hudson Hotel has long had the resort fee scam in Manhattan but it has spread far beyond them to over 16,000 rooms in the City. Other hotels want to look, but not actually have, rooms that are priced just as low! The exact breakdown of just how much New York City is losing from scam hotel resort fees per hotel is profiled in the table below. Please feel free to contact hi@killresortfees.com with any further information - or of course if any of these hotels decide to get honest and stop charging resort fees. Click here to download the NYC Resort Fees spreadsheet. 
 

Hotel Name Resort Fee Pre-Tax Resort Fee With Current Sales Tax Rate Resort Fee With Hotel Occupancy Tax Rate Fee Difference Number of Rooms in Hotel Loss Per Day to City in Tax Revenue Loss Per Year to City in Tax Revenue
The Avalon Hotel $20.00 $21.78 $22.95 $1.18 100 $117.50 $42,887.50
The Benjamin $30.00 $32.66 $34.43 $1.76 209 $368.36 $134,452.31
Crowne Plaza Times Square Manhattan $27.23 $29.65 $31.25 $1.60 795 $1,271.81 $464,211.08
Dream Downtown - Dream Hotel Group $9.14 $9.95 $10.49 $0.54 316 $169.68 $61,934.70
Dream Midtown - Dream Hotel Group $9.18 $9.99 $10.53 $0.54 221 $119.19 $43,504.65
Fifth NYC - An Affinia Hotel $25.00 $27.22 $28.69 $1.47 209 $306.97 $112,043.59
Flatiron Hotel $19.00 $20.69 $21.80 $1.12 64 $71.44 $26,075.60
The Franklin Hotel $12.00 $13.07 $13.77 $0.71 50 $35.25 $12,866.25
Gardens NYC - An Affinia Hotel $25.00 $27.22 $28.69 $1.47 132 $193.88 $70,764.38
The Gregory Hotel $28.00 $30.49 $32.13 $1.65 132 $217.14 $79,256.10
The Highline Hotel $18.12 $19.73 $20.79 $1.06 60 $63.87 $23,313.65
Hotel 32 32 $13.76 $14.98 $15.79 $0.81 106 $85.69 $31,277.00
Hotel 48Lex New York $20.00 $21.78 $22.95 $1.18 116 $136.30 $49,749.50
Hotel Hayden New York $16.33 $17.78 $18.74 $0.96 122 $117.05 $42,721.53
Hotel Hugo $15.00 $16.33 $17.21 $0.88 122 $107.51 $39,242.06
Hotel Mela Times Square $30.00 $32.66 $34.43 $1.76 232 $408.90 $149,248.50
Hotel Hudson New York - Morgans Hotel Group $29.95 $32.61 $34.37 $1.76 1,250 $2,199.45 $802,800.39
Innside New York NoMad - Melia Hotels International $19.00 $20.69 $21.80 $1.12 313 $349.39 $127,525.98
The James New York - The James Hotels $30.00 $32.66 $34.43 $1.76 114 $200.93 $73,337.62
The Knickerbocker Hotel $30.00 $32.66 $34.43 $1.76 330 $581.62 $212,293.13
Le Parker Meridien - Starwood/Marriott $15.00 $16.33 $17.21 $0.88 730 $643.31 $234,809.06
The Mave NYC $20.14 $21.93 $23.11 $1.18 72 $85.19 $31,095.15
The Michelangelo Hotel $35.00 $38.11 $40.16 $2.06 178 $366.01 $133,594.56
NoMo SoHo $25.00 $27.22 $28.69 $1.47 264 $387.75 $141,528.75
Nylo New York City $29.99 $32.65 $34.41 $1.76 291 $512.72 $187,141.54
Paramount Times Square $25.00 $27.22 $28.69 $1.47 597 $876.84 $320,047.97
Park Central New York $31.00 $33.75 $35.57 $1.82 761 $1,385.97 $505,879.51
Park Lane Hotel $33.00 $35.93 $37.87 $1.94 628 $1,217.58 $444,415.74
Radisson Martinique on Broadway $15.00 $16.33 $17.21 $0.88 532 $468.82 $171,121.13
The Redbury New York $28.00 $30.49 $32.13 $1.65 261 $429.35 $156,710.93
RIU Plaza New York Times Square $12.00 $13.07 $13.78 $0.71 647 $456.31 $166,552.99
The Roger $33.75 $36.75 $38.73 $1.98 194 $384.67 $140,402.95
The Roosevelt Hotel $25.00 $27.22 $28.69 $1.47 1,015 $1,490.85 $544,160.15
Row NYC $30.00 $32.66 $34.43 $1.76 1,331 $2,345.89 $856,248.94
Shelburne NYC - An Affina Hotel $25.00 $27.22 $28.69 $1.47 325 $477.34 $174,230.47
Stewart Hotel $35.00 $38.11 $40.16 $2.06 610 $1,254.31 $457,824.06
Viceroy Central Park New York $25.00 $27.22 $28.69 $1.47 240 $352.50 $128,662.50
Warwick New York $25.00 $27.22 $28.69 $1.47 426 $625.69 $228,375.94
The WestHouse New York $45.00 $48.99 $51.64 $2.65 170 $450.08 $164,277.38
The William Vale Hotel $2.00 $2.18 $2.30 $0.12 183 $21.05 $7,681.42
Wyndham New Yorker $29.00 $31.57 $33.28 $1.70 1,083 $1,845.16 $673,483.86
Yotel New York $25.00 $27.22 $28.69 $1.47 669 $982.59 $358,646.72
TOTALS 16200 $24,181.91 $8,826,397.21

The sales tax rate for hotel resort fees in NYC is currently calculated at 8.875%
The hotel occupancy tax rate for hotel rooms in NYC is calculated at 14.75% 
This table is based on 100% occupancy
There are 365 days in the year

New York City loses $8,826,397.21 annually - over eight million dollars - due to hotel resort fees. 

For any further questions about these numbers, please contact hi@killresortfees.com

Join the discussion at @KillResortFees
 

The President Makes $66,168 A Day Off Scam Hotel Resort Fees

People often ask me why has there not been more movement on resort fees. “What is taking so long?” They ask. “This is a basic scam. How have politicians not acted?”

Well, one reason is that the current President of the United States is earning 66,168 dollars per day on resort fees at his hotels. This is just resort fees at his three hotel properties that charge scam hotel resort fees in addition to the regular advertised hotel room rate. This number does not include mandatory fees at condos or private clubs of the Trump brand.

The Federal Trade Commission did not act quick enough to address scam hotel resort fees under the Obama administration. A President that personally profits from the resort fee scam is also unlikely to address it. Despite his pledge to drain the swamp, this is a pretty swampy issue but we are welcome to being surprised Mr. President!

How did we do the math to see how much President Trump is making every day from resort fees? Currently, there are resort fees at three Trump hotel properties. Here are the numbers:

The Trump International Beach Resort in Sunny Isles Beach, Florida has a $24.61 resort fee per night. The hotel has 356 rooms. That is $8,761.16 per day.

The Trump International Hotel Las Vegas in Las Vegas, Nevada has a $32.88 resort fee per night. The hotel has 1,304 rooms. So that is $42,875.52 per day.

The Trump National Doral Miami in Miami, Florida has a resort fee of $22.60 per night. The hotel has 643 rooms. That is $14,531.80 per day.

Any politician that wants to show support of President Trump is unlikely to act on this issue. For the politicians that have the chutzpah to stand up to the President and his scam resort fee profits, we welcome you to join our cause.

The Resort Fee Scam in Washington, DC

Resort fees of course are not just for resorts - all hotels want in on the scam! That is why just under a year ago there were only two hotels in the Washington, DC area that charged scam resort fees - now there are eight!

It's true. In less than one year scam resort fees have increased at a rate of 300% in the District of Columbia. They of course do not call them resort fees in a city. When hotels use the separating pricing into two amounts scheme in a city, as we have seen in New York City, they often call it a facility fee. And that's exactly what hotels across DC are doing with their scam facility fees. They advertise and book one price, but when a guest gets to the hotel they are forced to pay an extra $22.90 per day that is separate for the room rate. Why not just include it in the room rate? Because making this amount separate from the advertised room rate allows the hotel to lie about the price of a room - it makes the room look much cheaper than it actually is and encourages the guest to book. Facility fees and resort fees are left out of comparison searches online so often the guest only finds out about the hidden fee when they get to the hotel. In Washington, DC some guests are now finding they owe a shocking $22.90 per day when they get to their hotel. 

Why is this allowed in Washington, DC? The Federal Government, notably the Federal Trade Commission, has said that resort fees harm consumers but they have failed to take any action. That does not stop local legislation from being drafted to protect visitors to the District of Columbia. We have met with many members of the DC City Council alerting them about the resort fee fraud that is going on in their city.

A great opportunity to do something about it would be to include it in the bill introduced by Councilmember Kenyan McDuffie about overnight stays in the city regarding home sharing. The bill was promoted by the hotel lobby, aka the American Hotel and Lodging Association. The head of the DC Hotel Lobby even bragged to the Washington Times that they wrote the bill that Councilmember McDuffie introduced. The Hotel Lobby wants to eliminate their competition and they have been spending millions to try to do that. Councilmember McDuffie probably does not want to look like he is introducing legislation on behalf of a powerful special interest - which he is. We have a solution! 

There should be some standard rules set for home sharing and hotels. Everyone wants a nice, safe place to stay when they travel whether at a hotel or at someone's home. They also want to make sure that the price they see advertised online is THE FINAL PRICE. There should only be one price advertised for home shares and for hotels in the District (plus taxes).

The bill introduced by Councilmember McDuffie in its current state was created by the special interest fueled hotel lobby. Any DC City Council member that wants to show they actually support fair rules, and are not just introducing legislation on behalf of the hotel lobby, should make sure that a provision against facility fees and resort fees goes into any home sharing or overnight accommodation bill considered by the city. Any DC City Councilperson who takes on home sharing without addressing the scam double pricing going on in DC's hotels has sold their soul to the hotel lobby. We encourage the city to make sure that all stays in the District of Columbia are fair, safe and have only one advertised price! 
 

 THE TAX AND FACILITY FEE IS TAKEN OUT OF ANY COMPARISON SEARCH - EXPEDIA, HOTWIRE, HOTEL TONIGHT - BUT WE WERE ABLE TO FIND THE SNEAKY FACILITY FEE AFTER MULTIPLE PAGES IN THE BOOKING PROCESS DIRECT ON THE KIMPTON SITE

THE TAX AND FACILITY FEE IS TAKEN OUT OF ANY COMPARISON SEARCH - EXPEDIA, HOTWIRE, HOTEL TONIGHT - BUT WE WERE ABLE TO FIND THE SNEAKY FACILITY FEE AFTER MULTIPLE PAGES IN THE BOOKING PROCESS DIRECT ON THE KIMPTON SITE

Nevada Senator Dean Heller Encourages Scamming Tourists

Senator Dean Heller of of Nevada spoke at the Senate Committee on Commerce, Science and Technology with three Commissioners of the Federal Trade Commission (FTC) on Tuesday, September 27, 2016. Senator Heller questioned why the FTC was interested in resort fees at all. He continued to allege that only 8 to 10 people have complained about resort fees. Senator Heller seems to be greatly uninformed on this issue. 

Senator Heller does not want the FTC to act on resort fees as he is taking the position advocated by the big lobbying group, the American Hotel and Lodging Association. Senator Heller is not standing up for the millions of American tourists that visit his state each year. By advocating that the FTC ignore the resort fee issue, he is taking the side of hotels that want to scam tourists into paying two separate room prices - only one of which is publicly advertised. Regular Americans work hard to be able to travel to Las Vegas but Senator Heller does not want to have transparency in pricing thus making it harder for Americans to afford to travel and enjoy their vacations. It is a shame that Senator Heller advocates continuing to scam American tourists with resort fees. 

The Power of the Hotel Lobby - The American Hotel & Lodging Association

How have scam resort fees been able to go on for so long? The hotel lobby has fat pockets and they are ready to use their money to make sure they get they get to keep charging high prices for hotel rooms.

What is the hotel lobby's agenda? Well they lay it out in their 2016 Policy Guide. The first objective is blaming online booking sites resort fees. The second is eliminating home sharing. Why are these their two main goals? Because they want to be sure to get as much money out of travelers as possible. The hotel lobby wants hotels to be able to trick consumers into charging two prices for one room for as long as they can. By blaming third party booking sites like Priceline or Hotel Tonight, they are attempting to deflect attention from the obvious blame of the hotel for the resort fee. The hotels themselves are the ones charging scam resort fees and the hotels collect 100% of the money from the resort fee. Resort fees are 100% related back to the hotel itself. Though reading the American Hotel & Lodging Association's policy goals for 2016, one would never know that.

Their other goal seems to be eliminating home sharing. If someone puts their apartment in New York City on Airbnb while they go away for the weekend and a traveler can rent it for $100 a night, that means fewer hotels in New York City can charge $700 a night. American Hotel & Lodging Association member Jon Bortz complained to the Wall Street Journal that Airbnb has reduced the ability for hotels to price gouge consumers. Hotels want to keep rates as high as possible and they want to make sure the $700 a night hotel room in New York City is always there. 

Profit for the hotel above everything else is clearly the goal of the hotel lobby aka the American Hotel and Lodging Association. So where do they spend their money? Giving it directly to members of Congress. 

The American Hotel and Lodging Association spent about one million dollars this cycle (2015-2016) on members of Congress. They've been busy. In terms of money spent, they are the 193rd highest spender out of 3,270 groups. That's pretty high up there in terms of money given to members of Congress.

Blaming third party operators like Expedia, Priceline and Hotel Tonight for resort fees truly makes no sense. Yet if the hotel lobby can spread their propaganda to enough of the members of Congress who received the million dollars they have to dole out, they just might be able to convince enough lawmakers not to act on resort fees. The American Hotel & Lodging Association exists to make sure hotels make as much money as possible. As long as lobbying and giving money directly to members of Congress keeps resulting in record profits, they will continue the practice. The resort fee scam will continue until members of Congress stand up for their constituents. 

 

 

Setting the Record Straight on Mandatory Resort Fees

The American Hotel and Lodging Association, the mandatory resort fees biggest fans, came out with a new piece on their website today - "Setting the Record Straight on Mandatory Resort Fees." Before you can say aw heeeeeeeeell no, we went ahead and summarized it for you line for line here.  

Here the American Hotel and Lodging Association argues that "transparency and guest satisfaction are at the core of the industry's model." Mmmm, probably not given the massive consumer outcry on resort fees but let us continue. Then they say "That's why the hotel industry provides guests full disclosure for mandatory resort fees up front." Well, that's just a lie. Resort fees are never included in the advertised price. They are usually very difficult to find, if consumers can find them listed at all. Sometimes they are listed as a tax. They are not a tax. Many consumers only find out about mandatory resort fees when they get to the hotel. 

 The Arizona Grand Resort and Spa hides their resort fee as a tax. A resort fee is not a tax

The Arizona Grand Resort and Spa hides their resort fee as a tax. A resort fee is not a tax

 

The Washington Post had an article on resort fees yesterday (6/16/16)  and here's the headline which obviously highlights the transparency problem.
 

The next point the American Hotel and Lodging Association makes is "mandatory resort fees were created in an effort to provide consumers with the best value by grouping amenity fees into one cost." This is not a value. It is a way to separate the room rate into two parts. One part is the advertised room rate used to lure a customer in and book and the other part is the resort fee surprise the consumer receives when he arrives at the hotel.

The Super 8 in Las Vegas has a resort fee. What sort of luxurious amenities does their resort fee offer? It offers more money out of your wallet as a consumer is what it offers. When I called to ask what the resort fee offers the clerk who answered the phone laughed at me, then kept laughing then said "it's just a thing in addition to the room." 
 

 The Super 8 in Las Vegas offers a bed, a color TV and a $12.99 resort fee + tax. 

The Super 8 in Las Vegas offers a bed, a color TV and a $12.99 resort fee + tax. 

Then the American Hotel and Lodging Association goes on to say "this practice aligns with guidance introduced by the FTC in 2012." It does and that is because the FTC, the Federal Trade Commission, only told hotels in 2012 they have to disclose the resort fee. Nothing more. So after that hotels took full liberty to go Where's Waldo on their site with hiding their resort fee. Within the FTC rules from 2012 on resort fees, hotels can advertise a $20 room and then charge guests $30 a night for a resort fee. Indeed, this practice is very common in Las Vegas. Many of the guests do not know their hotel actually costs $50 until they arrive at the hotel. The Federal Trade Commission has done nothing on this issue to protect consumers.

 A $28 a night advertised room with a $29.12 mandatory resort fee. 

A $28 a night advertised room with a $29.12 mandatory resort fee. 

Here is the next part of the American Hotel and Lodging Association piece on Mandatory Resort Fees

Here is a laughable add on where the hotels are trying to blame the tools where consumers book the hotels instead of the hotels themselves for the problem. Here they are saying -  hotels are the ones adding on the resort fees on top of the advertised price but let's totally ignore that and just blame someone else entirely for these mandatory fees. Let's make it - the internet and the consumers who book there!

Hotels are mad that people are using online booking agents like Expedia, Priceline and Hotel Tonight to book their hotels. People use these sites because they can compare prices between hotels.  When customers book on these sites, they take a percentage of the price and pass the rest on to the hotel. The consumer only pays the advertised priced (and then of course gets slammed by a resort fee when they show up at the hotel). Hotels are mad because people are not going to the hotel's website directly to book. If customers did that, then hotels would get 100% of the money. If a customer books on Priceline, they might only get 80% of the money. So here instead of addressing the scam that is mandatory resort fees, they are just blaming the online booking agents (OTAs) because the hotels loose money when consumers want to be able to shop online and compare prices between hotels. 

Every consumer might not know how Priceline makes money but is that the fault of the consumer? Why is the American Hotel and Lodging Association saying it is a problem that the average consumer does not understand how online travel agents make their money? A lot of people do not understand how a lot of things work but you know what it does not have to do with anything here? It does not. They are just trying to get you to ignore the fact that hotels are purposefully advertising one low price but charging a consumer a higher price when they get to the hotel with mandatory resort fees.

Then they allege that online travel agents do not pay taxes but they never say what taxes those are or what this even means. Resort fees DEFINITELY hurt local and state communities because the resort fee is taken away from the room rate - though it should be included - so in a city like New York that has a hotel occupancy tax only the advertised room rate is taxed, not the resort fee. This is a trick the hotels are using not just to deceive consumers but to deprive state and local governments of essential tax revenue.

 We have discussed the way resort fees do not pay the hotel occupancy tax many times before

We have discussed the way resort fees do not pay the hotel occupancy tax many times before

 

Ok so what's the next move? Some infographics. Let us discuss this hot mess.

LOL I too would be happy to pay a mandatory resort fee if my $30 mandatory resort fee it included a free cruise through the Hawaiian islands. Well, no resort fee does include a cruise so it is not worth it.. What do resort fees tend to cover? Faxing, boarding pass printing, print newspapers, local and toll-free calls and other such services that went technologically obsolete by 1998. Being forced to pay for 1-800 calls in the name of a resort fee when every single human staying in a hotel today has a cell phone is truly painful for the consumer. 
 

Next up propaganda by the hotel lobby


Yeah no one doubts that many people have not stayed in a hotel without a resort fee because it is true, most hotels do not have resort fees - yet. The average mandatory resort fee in October 2015 was $24.93, an increase of 30 percent over the $19.20 average resort fee of hotels the year prior. The number of hotels with resort fees grew from 1,191 hotels in December 2014 to 1,671 hotels in October 2015. This is an increase of 40.3 percent. So though a hotel might not have a resort fee now, it probably will if the hotel industry keeps up at the current rate. 

What if a hotel consumer wanted to go to Las Vegas? Every single hotel on the Las Vegas Strip charges resort fees. That is all 62,000+ rooms on the Las Vegas Strip charge resort fees. There is total resort fee collusion in Las Vegas. Where else are resort fees big? Resort fees are big at hotels where they can take advantage of tourists by charging them bogus fees. Sadly it is very difficult to find a hotel around Disneyland or Disney World that does not charge resort fees. From the Best Western in Orlando to the Waldorf Astoria in Orlando, all charge resort fees. This is a truly despicable way of targeting unsophisticated tourists. 

Resort fees are generally not charged at hotels where the majority of their revenue comes from business travelers. Business travelers have options and like to earn loyalty at one hotel. They are unlikely to stay somewhere that charged them a surprise resort fee. If ever charged one, they do not return. Hotels that target tourists know their customers will likely only be there once in their lives so they can spring all sorts of fees and do not need to worry about the customer never wanting to come back.  Hotels know this so they specifically target customers who are on vacation at America's great vacation destinations - Orlando, Miami, The Florida Keys, Las Vegas, San Diego, Anaheim, Palm Springs, Niagara Falls and Arizona are the most likely places for tourists to find a resort fee. 

In terms of that 55% graphic that is some real LOLOLOLOLOL. No one has any idea what a resort fee covers. A very small percentage of hotels will state that the resort fee covers free local calls and boarding pass printing, but most do not list what the resort fee covers. When calling hotels for research into what the resort fee covers, the staff themselves did not know. If it is not listed online, and it is not known by the staff working at the front desk, many staff said that the resort fee was "a credit card processing fee," "a local tax" and "just a thing everyone does." Mmmm, all incorrect. 

Listen, I know there are some problems with polling but this poll is pretty whack. How many people did they interview? Where were they interviewed? Based on the information provided here, it is possible one person who worked at the American Hotel and Lodging Association was polled and these are the results. If you actually look at where customers discuss resort fees, there is NOT ONE CONSUMER EVER who has publicly come out in favor of support for resort fees. Google TripAdvisor and Resort Fee and 100% of the results are about how the fees were hidden or they thought the resort fees were a total scam. Search for Resort Fees on Twitter and you will see 100% of the tweets from consumers are negative. 

YOUR MOVE FTC / CONGRESS. THE PEOPLE ARE WATCHING YOU! 

A Taxing Issue

No one likes taxes. No one likes resort fees. Who is suprised to learn that these two issues go together? 

Hotels that charge one advertised rate and one resort fee instead of charging just one total hotel price are depriving state and local taxing authorities from revenue.

The Row Hotel in New York City advertises a $223.65 hotel room on their website. The hotel has a $25 facility fee. So a pre-tax hotel room at The Row costs $248.65. That is the amount that The Row should be taxed at to calculate the New York City occupancy tax and the New York City Javits Center tax. Yet, because $25 is missing from the total cost of the hotel, the entire price of the room is not subject to the occupancy tax or the New York City Javits Center tax. The resort fee at The Row in NYC is only being charged the New York City sales tax and the New York state sales tax. The facility fee / resort fee/ second room rate at The Row Hotel is only subject to 8.875% taxation. The advertised room rate is subject to a 16.3% tax rate.

New York City is losing out on their hotel occupancy tax and their Javits Center tax by not taxing the entire room rate. This is depriving New Yorkers of important funds that all of the other hotels are paying on their full advertised rate. The fifteen hotels in New York City that charge resort fees are depriving New Yorkers of essential tax revenue. 

How To Trick Consumers and Hide A Resort Fee

Resort fees are meant to deceive consumers into thinking a hotel rate is one price when actually it is much higher. Since the whole purpose of a resort fee is to trick a potential customer into thinking they are paying less than they actually are, let's look at how one hotel hide its' resort fees. 

Deception Of The Day: The Doubletree Resort by Hilton Grand Key Resort - Key West

Here is the main website of The Doubletree Resort by Hilton Grand Resort - Key West: 

On their main page just below their main photo you will see the rules of the hotel. No smoking, self parking is available, if you want to bring Fido, it will cost $75.00. Absolutely nowhere on the main page is there a mention of an extra resort charge to get your key in addition to the listed price.

So let's look for a date - let's say September 16th for one night, and see what happens. Here's step 2/5 of the booking process:

Screen Shot 2016-03-28 at 3.38.55 PM.png

Ok, so here it looks like the best available rate is $279. Do you see the mention of the resort fee? Probably not. If you keep staring and Where's Waldo the page you might see at the very top there is a mention of the resort fee of $25 in 7.5 font. In case you were wondering, the room is being advertised in 21 font size. So let's go to the next step, step 3/5 and try to reserve that room for $279 to see if we can really figure out the price there. Here's the next page:


Ok! The Doubletree by Hilton Key West says we are 3/5 of the way there. Any mention of the resort fee on page three? Nope. So where did that tiny $25 fee go?  It went away apparently! Before we get closer to figuring out the price, we just have to fill out all of this personal information and then we get to the next stop, page 4/5. And....drum roll please....80% through the booking process they let you know about the resort fee! 

Here is what it looks like:

And then you can go to the final page to book and reserve your one night with a credit card.

An interesting note here is that they say that the resort fee is $25. Is that resort fee taxed? Or is the tax in the general tax area below? Let's try calling the hotel to see. So we called the hotel, asked a question about the resort fee taxation and the front desk seemed stumped and transferred us to general Hilton reservations where we waited for ten minutes for anyone to answer the phone. The woman who answered the phone was clearly nowhere near Key West, did not know the hotel even had a resort fee and did not know about whether or not it was taxed. 

If you were an inquiring mind who wanted to investigate further online you might go back to the main page of their site you could click on Hotel Details. From Hotel Details, that allows you to go to Hotel Policies. This is a particularly entertaining page. Enjoy this:

From this page one can gather that the Doubletree by Hilton in Key West can charge any  amount they feel in the name of a resort fee. Unlike every other item on this page - late checkout, pets, etc - the hotel does not list an specific amount for the resort fee purposefully leaving it open ended. Parking, as they say at the end of the page, is $0.00. Except that it is not free, as it is listed under the undisclosed Daily Resort Charge at the top. Whatever that fee may be!

So do you know the final price of the hotel? Of the resort fee? Is parking free or not? Do you have absolutely no idea what you getting for that room rate? Congrats! That is the point of the resort fee. Enjoy your trip to Key West :-/

 

You Can End Resort Fees

Resort fees have long been a deceptive form of drip pricing at hotels across America. One rate is advertised but then a much higher rate is actually forced on the customer when they arrive at the hotel. It's time to end this pricing lunacy and bring one fair price to the hotel search once and for all. 

The power is in your hands. You, tourist and traveler, can sign our White House petition calling for an end to resort fees. You can call your members of Congress and urge them to pass the Truth in Advertising Act. You can contact state legislators who allow tourists to get tricked in their districts. For more info on how to get involved, check out our action page. The power is at your fingertips.