In the midst of the national hoopla around the legalization of sports betting, a minor, but intriguing, story from the Las Vegas Strip appeared. On June 7th, Wynn and Encore Resorts announced an end to parking fees for hotel guests and customers who spend more than $50 in the casino or in the restaurants. So far, the change is unique to Wynn. Long-time Las Vegas observers wonder if other resorts will join Wynn in reversing the trend in paid parking on the Strip. Parking fees are relatively new to Las Vegas. In 2016 MGM became the first company to charge for parking, Caesars, Wynn and the Cosmopolitan followed suit. The trend has not swept across the country yet, but if it is successful in Vegas it probably will begin to show up in other markets.
The rationale seemed to be two-fold; too many people were using the free parking and not spending any money in the resorts; and/or the resorts needed to find a way to monetize the large and expensive structures built to accommodate visitors. Besides, the argument went, the fees were minimal and customers expected to pay for parking because it is never free in any major city and it is much more expensive than in Las Vegas.
It is true that parking is expensive in cities. Anyone driving a car to go out to eat, see a movie, or hear the philharmonic can expect to pay handsomely to park the car. The resorts are correct; people do expect to pay to park, except of course in Las Vegas. Customers in Las Vegas casinos have grown to expect many services will be free or very inexpensive to the gambler. That model has been changing for years, especially on the Strip. Under pressure from investors and Wall Street analysts, room rates have gone up year after year, buffets and other restaurants are no longer bargain priced and a daily “resorts fee” was added to every hotel bill. None of those changes were popular with the customer, but Wall Street applauded every quarter. As a general rule, if Wall Street loves an idea, no one cares much what the customers think. No one cares until the customers vote with their money, then people begin to listen.
Wynn Resorts did not exactly say customer complaints lead to dropping the fees, but the statement did not rule out that possibility: “Our guests choose to stay with us because of the attention we give to perfecting every detail of their experience. We have come to believe that charging additional parking fees is counter to the personalized service we provide. This new policy directly reflects the way we know our guests want and deserve to be treated.” The company will continue to impose a resorts fee, but now parking is included in the resorts services.
In the big picture, parking fees at Wynn Resorts is small potatoes unless it indicates something more important. If Wynn is the only company to stop parking charges, the story ends there. But if other companies do the same, it has much larger implications. It makes perfect corporate sense to charge whatever the market will bear for every product and service that can be sold. However, to the consumer, it is not quite as logical. Resort guests usually have a budget that has to cover all the things a person intends to do as well as additional costs such as parking, taxes, resort fees and five dollar bottles of water in the hotel room. When do those added costs diminish the guest experience, reduce the number of visits and cut down on the “fun” things, like gambling, that bring the guest in the first place?
That is a question that many observers have been asking in Las Vegas since the beginning of the corporate policies changes that lead to $5 dollar water, resort fees and lastly, parking fees. Las Vegas locals have been saying for a long time that the increase in non-gaming revenues was coming at the cost of gaming revenues and in time that would begin to have a negative effect on the industry as a whole. I don’t think parking fees are a tipping point for the industry. However, Wynn’s action does suggest there may indeed be a limit to added fees. It just might imply there is a limit on how much a resort can charge people just to be on a property before those charges impact the core business. The Wynn experience begs a basic question: who is ultimately going to pay the real price of parking, the customer or the casino?
