Priceline’s Booking.com, the major competitor to the Expedia group’s behemoth of online travel booking sites, will start charging hotels commission on resort fees.
They believe the shift away from selling consumers a total rate, and moving money into the resort or destination fee bucket, cheats them of revenue. And of course it has reduced commissions that hotels pay.
It also cheats consumers, and Booking.com (as well as Expedia and other sites) have been fully complicit by not displaying total price to consumers from the outset. Booking.com mostly sells reservations taking a commission on realized revenue after checkout, while Expedia sells more prepaid bookings. For Expedia to match they’d need to calculate the resort fee with each reservation at time of booking. And if they’re doing that there’s no technological excuse not to display it to consumers as part of the price being compared.
Expedia Dancers Don’t Help Customers Understand the Full Cost of Their Trip. Flickr: Juggernautco
Hotels like to have their rates displayed without these charges because it makes them look cheaper to consumers. If they unilaterally started showing full room costs while competitors did not they’d be at a disadvantage.
Similarly if hotel booking sites start showing full costs to consumers, it makes them look more expensive for the same hotel than competitor sites that do not show full price. So there’s a huge incentive for online travel agency websites to hide full prices from their customers.
Of course another model would be to deliver the best information possible to customers, in order to help them make the best travel decisions, and earn loyalty for future bookings. The idea would be to reduce the myriad websites consumers use shopping travel and simplifying the reservations process. That’s ultimately the model that Google is pursuing, and that online travel agency sites are fighting them on.
This will be interesting to see play out.
- Will other booking sites match?
- Will hotel chains push back, as part of their commission negotiations (threatening to pull inventory)?
If the Booking.com effort succeeds, will Expedia follow suit — or try to compensate with higher commissions on base rate? If they too move to tax resort fees, that reduces some of the incentive for hotels to use these hidden charges.
Right now a hotel benefits both with deceptive selling to consumers and commission savings. This would reduce or eliminate the commission savings.
At the same time Las Vegas has found that fraudulent resort fees hurt their business because they’re price floors when hotels need to discount in the face of declining occupancy — in other words, simply because demand curves slope downward — and they’re charges that lead to guest resentment.
There are two possible paths forward if the change for online travel agencies to tax resort fees sticks.
- It makes resort fees less common, and online agencies can benefit by helping consumers understand the differences between hotels for their total trip cost
- Online agencies make even more from resort fees, creating even more of an incentive for the online agencies to support the practice and obfuscate these charges from their customers.
The hope of course is that one of the online agency sites sees the benefit of actually helping consumers understand trip costs, by displaying all-in prices, and pursuing share shift through better service.
It always amazes me, by the way, just how poor online travel agency websites are at helping consumers pick hotels when their entire business is predicated on convincing customers to use them to book their hotels (and travel packages). It’s time for some disruption.
how is booking.com complicit by displaying the total price from the outset? seems the opposite.
also taxing seems to be very much the wrong word here. they are charging the hotels commission. taxing sounds like what the consumers pay.
It amazes me how many people simply cannot do simple math these days. I know if a hotel charges a $30 per night resort fee, that I need to add it to the total if it isn’t included. I have learned to look for it mostly from reading blogs, in fact I was looking at an award booking at a Sheraton resort and on the page it clearly states that all rooms were subject to the fee. What surprises me is some of the places that charge them, there’s no reasoning to it and you basically get nothing for it but since the government does nothing it will likely continue.
Why can’t our do-nothing Congress address this legislatively?
“have been fully complicit by now displaying total price to consumers from the outset”
“now” is supposed to say “not” i assume?
The great advantage of using the hotels.com UK site, set to US currency, is that the fees are included in the price – it’s a legal requirement to display, up front, the price including compulsory extras.
@NB, thanks for the helpful tip.
Some of us don’t have–or prefer not to spend–inordinate amounts of time reading through the fine print and trying to determine what the resort fee is, or if there even is one, for every potential hotel we research. We have better things to do with our time, such as read blogs like this.
@NB, thanks for the helpful tip.
Some of us don’t have–or prefer not to spend–inordinate amounts of time reading through the fine print and trying to determine what the resort fee is, or if there even is one, for every potential hotel we research. We have better things to do with our time, such as read blogs like this.
So resort fees vs room rates still are taxed differentlyby some states/municipalities also the hotels don’t award points on resort fee spend so while charging commission on them is a start I doubt they are going to stop with the scam of resort fees.
I will 100% go out of my way to stay at a hotel that does NOT charge a resort or destination fee.
Anything that can be done to get rid of these bogus fees is good for the consumer.
“It always amazes me, by the way, just how poor online travel agency websites are at helping consumers pick hotels when their entire business is predicated on convincing customers to use them to book their hotels”
It always amazes me, by the way, just how poor the airlines are at helping consumers understand basic economy fares. And yet consumers book and pay for them every single day, just as they book these hotel rooms with outlandish resort fees and later claim at check-in they had no idea about these fees. Same as with the airlines, right?
People don’t read. The Internet has made it easier for companies to capitalize on that.
I rarely ever pay them and when a hotel adds them I leave permanently and don’t ever return
Unless its a Hyatt as they waive them for Globalists or the hotel is so exceptional I am willing to make the exception and pay up.That makes it pretty rare but I have ten hotels in the world that I will pay the nuisance fee as they deliver above and beyond
@LAXJeff said “I will 100% go out of my way to stay at a hotel that does NOT charge a resort or destination fee.”
Jeff – don’t ever go to Las Vegas then or, if you do, expect to stay in a s**t hole. I gamble a lot and spend 30 or more nights a year between Las Vegas and Atlantic City (plus a handful of trips to other locations). Maintaining my Caesars Diamond status, which waives resort fees, is a priority every year. I’d pay over $1000 for resort fees on 30 nights (check Caesars Palace resort fees in LV and AC) so this is a huge benefit and along with the comped rooms, free shows, $100 annual dinner voucher, lounge access and priority lines it is WELL worth keeping my status.
In general, I’m not in favor of government mandates. The consumer should be smart enough to figure out the total cost of their trip so I have no problem with resort fees or add on airline fees. You just have to do your research to better understand it and then make an appropriate decision.
Not much different from baggage fees. Yea, Southwest doesn’t look so hot all the time when you look at their price, but you’re saving $50 in baggage off the top that you’re paying on other airlines. We need consumer protection laws that force displayed pricing to reflect all required costs.
These resort fees — since they are not optional — are simply deceptive pricing. I recently stayed at a Marriott for a wedding. I did nothing at the hotel but sleep there, yet I got charged a “resort fee.” I protested that I did not use any resort amenities, but they said it was a mandatory fee. I asked why it was not included in the room cost and got no real answer.
@bhcompy: It’s actually much easier to make the case for baggage fees. They really are optional given that many travelers don’t check a bag and very few check two. They should be positively disclosed at time of booking but it’s hard to see how they could be added in to the pre-paid price.
These fees are closer to YQ surcharges you pay on a ticket — you’re going to pay them no matter what, the fact that they’re broken out in the fee is of zero consequence to the final price.
Transparent pricing should be mandatory. All required fees, taxes, and other required charges should be disclosed and know PRIOR to booking. This is a simple rule, yet somehow, government agencies have not stepped up to require it. Ordinarily, I’m not a big fan of government mandates, but when an industry takes advantage of the consumer, then it’s time to establish a few ground rules. You wouldn’t go into Macy’s and expect to be charged more at the counter than the price on the item (except for the sales tax).
@LarryInNYC: Should be a check on the search to make it transparent as possible. You don’t know if a fare includes it or not when you search and you are planning it, so just allow a flag for per bag costs. Again, that’s where consumer protection laws should step in to enforce some type of standard. If a carrier wants to price cheaper by not including it vs including it, it should be disclosed up front, just like with a resort fee or parking.
We must never say that these “resort fees” are similar to anything the airlines charge. The airlines are required by law to quote the price that the consumer must pay. If the consumer chooses to pay extra for an optional service, that’s his or her decision. With the “resort fee” you have no choice but to pay or go elsewhere. I do the latter ever single time. It should be banned as consumer fraud, and the full price should be included in every search. Thanks NB, for the suggestion of using hotels.com UK site. I will definitely check that out.
What DaveS said…..
I remember some years ago when I had to book a last minute hotel in a resort town for some work I was doing. Was literally me arriving at 9pm, and leaving at 8am. The conversation went like this…
Hotel – “There’s a 30$ resort fee. This covers the pool, fitness center, and towels.”
Mangar – “The pool and fitness center are closed, and I’m leaving first thing in the morning. I’m not going be able to use either.”
Hotel – “Well umm.. It’s mandatory…..”
and the conversation devolved from there. I ended up paying it though. I’m a Libertarian who generally hates regulation and big government, but I’m not gonna lie – I absolutely loved it when they forced airlines to start disclosing the full price. I wouldn’t be opposed to that for Hotels, because it is essentially a deceptive business practice.
Resort fees are just like fuel surcharges, a way for the supplier to get make more money. They are pure, total deception and should be outlawed. Because I think if they were included in the total price upfront, hotels would lose business, because it would obviously show they are more costly overall. I don’t think OTAs charging a commission on them will change anything for the consumer.
Wish “resort fees” were only added if you use the amenities. I resent having to pay those when all I need is a place to sleep. Those charges should be included in the total price quoted, however, and making rooms seem cheaper than what they end up being has been an unwelcome surprise.