Just three weeks after Booking Holdings began charging hotels commissions on their resort fees, Expedia Group ruled out doing likewise but will begin downgrading hotels in the sort order on the online travel company’s websites when hotels charge consumers such resort fees.
Cyril Ranque, president of Expedia Lodging Partner Services, told Skift exclusively that the company heard from “several disenchanted and even furious” hotel partners about Booking.com’s move to impose commissions on hotels’ resort fees globally.
“Booking’s unilateral and, frankly, blunt move is pretty typical of their playbook with hotels,” Ranque said. “We’ve seen this many times in Europe where their position allows them to get away with this kind of approach. And this is simply not how Expedia Group conceives the partnership we want to have with the lodging industry.”
Ranque added: “I’m not particularly surprised at their action,” referring to Booking Holdings’ new hotel commission stance.
Booking Holdings declined to comment.
Expedia did not provide examples of any heavy-handed Booking.com actions in Europe. Over the years Expedia, too, has faced antagonism from hotels about commissions, but Ranque said recently he thinks Expedia’s current relationship with hotels is probably better than it’s ever been. One manifestation might be the recent Expedia pact with Marriott.
Resort fees have become very controversial both with regulators and consumers. Some hotels, in destinations such as Las Vegas, New York City, Miami, and other destinations around the world, offer travelers a relatively low nightly rate but then tack on a daily resort fee — sometimes higher than the room rate — and collect these charges at checkout.
Many of these hotels view resort fees as a way to not only circumvent paying online travel agencies higher commissions by excluding them from the base rate but also as a way to appear higher in search results with lower base nightly rates than competing hotels that include all charges in the base rate.
Playing Games With Hotel Rates
For example, the Aria Resort & Casino was currently offering a $138 nightly rate for a deluxe king room plus a $39 daily resort fee. Circus Circus Hotel in Las Vegas was charging a higher daily resort fee, $36, on Vegas.com for a manor king room than the base room rate, which was $26.
Sometimes these resort fees are shown up-front in initial search results. At times consumers only see them before they complete their bookings, and there are many instances where travelers get a shock when they find out about and must pay these fees at checkout.
In early June, a week after Booking Holdings’ new commission policy went into effect, Ranque said he was not a fan of resort fees and that Expedia would monitor the situation before deciding what to do.
That decision came quickly with Monday’s decision.
Ranque said Expedia sought to “reduce the level of anxiety” among hotel partners that Expedia would match Booking’s policy and impose commissions on resort fees. He said they are a substantial source of revenue and profit for some properties.
But now that Booking will start getting higher commissions payments from some properties, is Expedia leaving money on the table by not doing likewise?
Ranque said some properties are reducing availability or ceasing to use Booking.com while giving Expedia more business.
Asked about the financial impact, Ranque said: “In the long run we’ll be in a good position.”
While disapproving of resort fees, Ranque said Expedia’s goal is to ensure that all resort fees are disclosed to consumers before they complete their bookings. Asked why these fees are not always exposed to consumers in initial search results on Expedia websites, Ranque said countries have varying regulations, and travelers in different destinations have different expectations of what is expected.
He said Expedia’s decision not to charge hotels commissions on their resort fees will differentiate Expedia Group from Booking Holdings.
Resort-Fee Hotels Will Be Downgraded
Ranque added that he thinks resort fees levied by hotels have a detrimental impact on the overall traveler experience.
Because of that Expedia has tech teams actively working on placing hotels that charge resort fees lower in the sort order on the company’s websites.
Ranque explained that a hotel’s placement in Expedia search results is determined by the strength of the offer, the overall quality score of the property, and the compensation Expedia receives for the booking. Through an Expedia Accelerator program, properties can pay to appear higher in Expedia’s sort order. Booking.com has a similar program.
Properties that charge resort fees can expect to appear lower in Expedia search results than they otherwise would.
“Our goal is to allow customers to compare like to like,” Ranque said — meaning seeing the full rate up-front.