Monday, August 20, 2007

Are Vegas Hotels Trying to Replicate Visa® and MasterCard's® Unbridled Interchange Fee Model? (

One of the more brazen moves in Ticket Master-like "convenience fee" excesses, is what is happening at several Las Vegas and other hotel properties. It seems that they are trying to replicate the excesses of Visa® and MasterCard's® interchange fee windfalls.

Within the last few month, we have noticed that there is a new charge appearing on hotel bills. It is called a resort fee. During one recent stay at The Hotel, there was no "resort fee," but just this week, it was added to a friend's bill.

During a stay at another property two weeks ago, the Green Valley Ranch tried tacking on their resort fee to the bill. They explained it was to cover the coffee in the room and other amenities; I thought that was what the hotel room charge was for? They acquiesced and we split the difference.

Click here to learn about Hilton's involvement and how it handled their resort fees.

The new resort fees are excessive profiteering and an unfair tax on guests who are going to grow more weary because these fees are about $30 extra per day. These resort or facilities fees are in addition to a regular room rate; much like the merchant interchange fees are really nothing more than a "convenience" or "facility fee."

Both are extra taxes because the companies can get away with it.

In the case of the two leading credit card associations, we guess the actual cost to transact one electronic card payment is pennies, yet they are forcing merchants and consumers to pay upwards of 2, 3, 4 and even 5% of their total purchase in excessive and unbridled greed payments.

In the case of hotels, the resort fee covers items that guests may never use, or that was once included. Years ago, when retailers like us were still using manual credit card imprinters and thick, multi-page carbon-copy card receipts that had to be processed and mailed away to clear, there were real interchange costs; today, it's any one's guess how insignificant the actual costs of processing payments are. Excuses for these fees range from covering fraud costs to paying for cardholders free airline mileages.

Just as the hotels are trying to pass along the cost of using the guy, Visa and MasterCard are successfully forcing retailers to pay more than one-hundred separate rates, including extra charges when cardholders present an affinity or frequent flyer card.

The difference between the new resort fees and the $40 billion interchange tax is that the latter is not negotiable and you can choose not to stay at a certain hotel.

Interchange fees are set by the banks in what we assert are forced on merchants through anti competitive and illegal price fixing schemes. At a Las Vegas hotel you can insist that their newest revenue center be removed from your bill, but retailers and consumers are still forced to pay whatever the banks dream up. We cannot choose another electronic payment service as Visa and MasterCard own an 80% market power over the entire industry.