Online Travel Agency Will Increase Their Profit To Protect Customers From Resort Fees. Really

Resort fees are roundly criticized by many people as a sneaky way for hotels to take more money from customers without fully disclosing it.  We use the term resort fee to generally refer to a myriad of fees hotels charge.  “Destination fee” might be more all-encompassing.  While customers uniformly seem to hate these fees, online travel agencies have their own reasons for disliking them.  The policy right now is that commission is generally not paid to the online travel agency for any resort fee a hotel charges.  That seems like it’s about to change.

Booking.com has announced that they intend to start charging a commission to hotels for the resort fees these hotels charge customers.  I’m on an airplane while I’m writing this, so it was a bit tough to drag my soapbox out.  However, I’ve managed to do so.  I have some issues with the information being reported by Skift.

Booking.com Isn’t Actually Trying To Help You

Skift includes a quote from a Booking.com spokesperson:

“As an extension of our overarching aim to provide our customers with transparent information about the total price they will need to pay at a property when they make a booking and to create a level playing field for all of our accommodation partners, we are updating our process when it comes to charging commission on mandatory extra fees that customers are asked to pay at the property.”

Let’s translate that into plain spoken English.  Hotels charge customers resort fees.  Booking.com doesn’t earn a commission on those resort fees.  They plan to start charging commissions on resorts fees “as an extension of our overarching aim to provide our customers with transparent information about the total price they will need to pay at a property…”

They’re not changing the way these fees are displayed.

They’re just charging the hotel more money.  They don’t appear to be doing a single thing to help customers.  This move only appears to increase the profitability when a customer books a room through Booking.com.

Resort Fees Are Bad.  Online Travel Agencies Are Worse

I’ve never been shy about my dislike of online travel agencies.  As a means to search all the hotels at a particular destination, online travel agencies (OTAs) such as Booking.com and Expedia can be helpful.  However, they frequently have incorrect or out-of-date information about certain hotels.  Their customer service also leaves a lot to be desired.

I tend to avoid OTAs for booking.  The problem is that the OTAs were created to help the very customers they end up hurting.  Frequent travelers know how to hunt around for the best rate.  Occasional travelers may rely on an OTA to have the best information and rates.  This has become increasingly false as some larger hotel chains now offer the lowest rates to members on their own websites.  You won’t find mention of that on an OTA like Booking.com, since they want you to book on their site.  Booking.com won’t get paid if you abandon your search and head over to Hyatt.com to book your next vacation.

This Change Won’t Kill Resort Fees

Booking.com doesn’t have an incentive to show you the lowest rate for a hotel.  They have an incentive to show you the lowest rate amongst other OTAs.  And, they also now have an incentive to promote hotels that charge resort fees, as they’ll earn more money when a hotel charges a resort fee.

Since resort fees are generally very high-margin fees for hotels, I don’t see Booking.com’s policy change here as a deterrent for hotels to charge resort fees.  Maybe if all the OTAs got together and agreed to charge really high commissions on these resort fees, we’d see a change.  I’m fairly certain that would violate the law.  Besides, if you make a living shearing a sheep on a daily basis (taking a small commission from a hotel on each room you book) you don’t want to kill the sheep.  You can make a lot of wool sweaters.  You can only serve mutton once.

But, don’t worry.  They’re watching out for your best interests.

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10 Comments

  1. Their goal is to be paid a commission on the hotel room they are selling. So many of these hotels are separating a good chunk of their rates in the “Resort Fee”. It would be like trying to cut a realtor out of their commission on the value of the land a house sits on or not paying a car salesman a commission on anything above the base model of a car.

    Booking Holdings owns Booking.com and Priceline. Expedia owns just about everything else. If these 2 companies decide to start collecting commissions on resort fees, or collecting the fees themselves ahead of time, that WILL make the fees obsolete. All hotels would be on an even playing field when sorted by price and there will be no more reason for the hotels to charge them, since the only remaining element would be customer complaints.

    Shout out to Four Queens and Casino Royale in Vegas for being the only 2 hotels in the tourist corridors of the strip and Fremont Street to be the holdouts on resort fees.

  2. “This has become increasingly false as some larger hotel chains now offer the lowest rates to members on their own websites. You won’t find mention of that on an OTA like Booking.com, since they want you to book on their site.”

    Not directly affiliated with Booking.com, but this is not quite true. The reason is simply that chains don’t give their member discounts to anyone. The only exception is Red Lion Hotels, in which case, OTAs do display those rates.

    OTAs are actually hurt most by resort fees. When unwary users get charged these non-sense fees, it erodes trust and customers complain to OTAs. A lot of customer support overhead, credit card disputes and so on.

    Barring any legislation, OTAs starting the charge commission on resort fees are probably our best bet right now to get rid of the ludicrous resort fees. Part of the reason resort fees exist, is to avoid the commissions. Otherwise, the hotels could have simply raised their base rates.

  3. Sorry to ignore the main point of your post, but you seem to hate OTAs and I want to point out they serve a true need in searching/booking independent properties. I travel to a lot of places where chains don’t exist and having somewhere that shows properties, rates, cancellation policies, and details in a consistent fashion is super helpful, not to mention a secure place to type credit card details and 1-click cancellation (especially in developing countries where hotel websites often don’t work and/or staff speaks minimal English). I’ve had great luck with Booking.com and continue to use them in the majority of my independent bookings.

    I agree, with chains I book directly, but don’t dismiss OTAs so quickly!

    1. Hey, Becky! Always appreciate your opinion. I did note in my post that I think the OTAs are great for searching. Personally, I prefer to book directly, even with independent properties. I understand that may not always be the case, given small properties in some markets that don’t have a secure website or maybe don’t speak English.

      However, I think the majority of occasional travelers are better off booking directly. In my opinion, the vast majority.

      1. OTAs are definitely great for searching. I feel a tiny bit guilty/not guilty when I find a hotel using booking.com or another OTA, and then book at the hotel’s website directly to get a better deal there. Sometimes the hotel will have the same rate at their website, but they’ll offer breakfast included for direct bookings, or sometimes they’ll simply advertise 5% off for direct bookings. I’ve also found different room types available when booking direct, or refundable rates while the OTA only has non-refundable.

        1. Allison, I wouldn’t feel guilty. Booking.com is doing what’s best for their business. You should do the same for you. If you get better benefits or a cheaper price by booking direct, go for it!

  4. I book directly with the property when I can because I have found that they will often have a deal or two to offer. The rest of my bookings are with the sites of IHG or Marriott. None of my stays have been an major lux. resorts so I don’t have any experience with all the resort fees.
    Frankly, I am not sure who to blame for the add on practice, the resorts, or the customers who pay them. If every resort charges crazy fees, consumers have little option, but if there are enough nice places to stay, consumers might want to support those locations who offer a fair price for their properties.This won’t stop the practice, but it might make you feel better for not paying the ransom.

    1. Jay, I typically see the same behavior when I book with independent properties directly (find the occasional deal). I actually find that even with big chains an e-mail can help work through a specific request I might have. Those are lost with an OTA.

      Resort fees don’t bother me as much as others. I wish they didn’t exist, but I can do the math to figure out how much they add to my bottom line price for a vacation. I think resort fees hurt occasional travelers more than frequent travelers because they’re likely not keeping as much an eye out for them as you or I might.

  5. Ed,

    While I am also more of a do-it-yourself traveler, I can’t fault a for-profit business making a change in their best interest, especially given the nuisance of these out-of-control resort fees. I’m not complaining about resort fees at hotels in luxury destinations like Hawaii that need to recoup capital investments, but rather that hotels that all of a sudden think that they are a resort for no reason.

    A perfect example of this is the last time I looked for rooms in NYC. The chain of POD hotels, featuring dormitory-sized rooms, and the Maxwell, which used to be the original W hotel, now think they are resorts. It’s even more amusing that the Maxwell thinks they are now a resort, since there used to be no resort fee when the Bliss spa was attached and offered use of their steam room for free. After the spa closed, and the hotel was ousted from the W portfolio, the hotel has added a $25 resort fee.

    When shopping for hotels, I’d like to be able to compare apples with apples. In both cases above, I went through the booking process until right before the confirmation where the resort fees were disclosed. This is a waste of time at best. I applaud any company socking it to these greedy, sneaky operators.

    When I shop for yogurt in a grocery store, I can pick up the container, and a government-standardized label summarizes the nutrition info and list the ingredients. A shelf tag discloses the price of each SKU. Why shouldn’t the same standardization be required for disclosing pricing on travel?

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