Booking Holdings faced opposition from hotels over its new resort-fee commission policy, although the brands that dropped out of Booking.com would not have delivered a material financial hit. This major reversal coincides with a leadership change atop Booking.com and represents a victory for hotels and their controversial fees.
Booking Holdings, which had announced it would begin charging hotels in the United States commission on their resort fees, has delayed implementing the new policy, Skift exclusively learned.
The company, which owns brands including Booking.com, Priceline, Agoda, and Kayak, is considering delaying the new commissions until January 1, according to multiple sources. The tentative new schedule for implementation — if the company goes through with it at all — is subject to change.
It is believed that Booking Holdings could be using the pause to reevaluate the whole policy, although an internal source argued that the twist is merely a change in timing to enable relevant partners to alter internal processes.
A Booking Holdings spokesperson declined to comment on the move.
The policy reversal — or pause, at the least — coincides with a leadership change at the holding company’s largest brand, Booking.com. Booking Holdings announced a week ago that Booking.com CEO Gillian Tans would be leaving her post immediately and was being replaced by parent company CEO Glenn Fogel, who now holds both positions.
Skift broke the story in late May that Booking Holdings would begin on June 1 charging hotels commissions on resort fees from those hotels that charge the controversial fees. The new commissions were to begin in the United States, and the plan was to roll out the policy globally thereafter.
Booking Holdings and Expedia Group currently only charge commissions on the hotel rate itself, and Booking felt it was unfairly not getting the compensation it deserved on the full price of the room. Hotels sometimes charge more for resort fees than for the room rate itself.
In the interim, three things happened.
Expedia Group announced it wouldn’t follow Booking and charge commissions on resort fees but would start dimming hotels — or downgrading them in search results — if they charged resort fees.
Hotels Dropped Out of Booking.com
Skift exclusively learned that several brands in Las Vegas and elsewhere, including the Golden Nugget (Las Vegas; Atlantic City; Biloxi, Mississippi; and Laughlin, Nevada), Wynn and Encore in Las Vegas, as well as a dozen Red Rock Resorts-affiliated brands in Sin City, dropped out of Booking.com over the resort fees and kept participating in Expedia Group.
Booking Holdings undoubtedly has a smaller share of hotel bookings in Las Vegas than does Expedia Group, and losing partnerships with several Sin City brands wouldn’t materially shake Booking Holdings’ financial results. For example, consider that Wynn and Encore properties in Las Vegas, which have gone missing on Booking.com, generated around $119 million in room revenue for the chain in the first quarter, and that’s perhaps about 7 percent of all of Las Vegas room revenue, according to a Skift Research estimate. Red Rock Resorts took in just $48 million in room revenue in Las Vegas during the same period.
Booking Holdings shook up the management of its Booking.com brand, but it’s unclear whether Tans’ ouster had anything to do with the resort fee commission implementation.
The situation could be in flux. Booking Holdings is not believed to have communicated the delay in implementing the new policy in a comprehensive way to hotel partners, and the timing could change.
It is also possible that Fogel will reverse the commission policy in its entirety and is using the supposed delay as cover for an about-face.
What’s clear is that Booking Holdings does not appear to be willing to adopt the Expedia tack of dimming resort-fee-imposing hotels in its search results out of fears of diminishing the user experience.
Expedia Group’s Cyril Ranque, who heads the company’s president of Lodging Partner Services, disputed the notion that Expedia intends to dim hotels that charge resort fees in search results.
“To be clear, we absolutely don’t plan to dim any property which applies mandatory resort fees,” Ranque said Tuesday. “It’s simply about leveling the playing field for hotels so that every dollar spent on a resort fee is treated the same for the price component in our algorithm as a dollar spent on a base price.”
Ranque said he doesn’t want to see hotels that include the entire nightly rate in the base price disadvantaged.
“Having our algorithm take mandatory fees into account, in addition to base price, ensures that hotels that break out fees from base price do not get a sort advantage over hotels that do not charge separate mandatory fees,” he said. “This approach is both fair to all our hotel partners and it enhances our customers’ shopping experience by allowing them to compare hotels ‘like-for-like’ based on the total amount they will eventually pay.”
Overall, however, if Booking Holdings ends up abandoning its resort-fee commission policy, the turn of events may help hotels bolster their controversial resort fees, which are a huge source of revenue and profit for some properties.
Note: This story was updated to insert an Expedia comment about the dimming issue, and to provide some room revenue statistics about Las Vegas properties that dropped out of Booking.com.
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Photo credit: In this Aug. 3, 2015, file photo, a man rides his bike past the MGM Grand hotel and casino in Las Vegas. Booking Holdings is delaying implementation of a new policy to charge commissions on resort fees. 343091 / 343091