Expedia Group's stance on resort fees could have been drafted by a United Nations diplomat. Expedia doesn't want to alienate hotels and seeks to pick up market share based on Booking Holdings' more forceful position. But it's hitting resort-fee-charging hotels right where it hurts — in the prominence of their listings.
As promised a few months ago, Expedia Group began this week to send hotel listings lower in the sort order on its Expedia.com and Hotels.com pages when properties add resort fees to base room rates.
Speaking at a lodging breakout session on stage at the Expedia Explore ’19 conference in Las Vegas Wednesday, Cyril Ranque, president of the company’s newly created Travel Partners Group, said Expedia wanted to take action on resort fees for transparency’s sake while also showing respect for hotel partners.
All things being equal, hotel listings would appear lower in the rankings on Expedia’s pages when they add nightly resort fees to room rates. Expedia’s algorithms, which determine where a hotel listing shows up on its pages, never took that into account before.
However, Ranque said, resort fees are just one consideration when determining how high or low a hotel listing appears on Expedia.com and Hotels.com. Expedia also takes other factors, including the room rate, the quality of the hotel, and its popularity, into account.
It should be pointed out that the compensation that Expedia receives is another factor in determining a hotel’s placement on an Expedia page. The company has an accelerator program, as does rival Booking Holdings, where hotels can pay extra to appear higher than they ordinarily would on Expedia’s pages.
So charging a resort fee won’t necessarily sink a hotel listing lower than dozens of other hotels, but it would likely making the property’s presence on Expedia less prominent than it would have otherwise been.
What Is the Context?
Expedia’s action on resort fees, which is considered tepid by some and too harsh by some hoteliers, comes after Booking Holdings announced several months ago that it would begin charging hotels commission on their resort fees.
Some hotels offer a basic room rate, such as $250 per night, as the first rate that consumers might see online, and only when consumers get further into the booking process do they find out that they would also get charged another $30 or $40 per night as a mandatory resort or facilities fee.
Some travelers don’t understand the resort fee when they book a room, and three weeks later, when the traveler checks out of a hotel, many are surprised to learn they’ll have to pay that long-forgotten nightly resort fee.
Some hotels in Las Vegas, for example, charge guests more for mandatory nightly resort fees than they do for the basic room rate. Although there are lawsuits pending against Marriott and Hilton, for example, probes by attorneys general in the United States, and congressional bills related to resort fees, they are becoming more common. Even hotels in urban destinations, such as New York City, are starting to routinely charge resort fees.
Booking Holdings officials said at the time they didn’t like hotels’ lack of transparency about the fees because travelers are sometimes unaware of them, and thought the company was getting short-changed when only getting paid hotel commissions based on room rates. Some view resort fees as a way for hotels to dodge higher commissions, and to appear as less pricey in search results.
Hotels that charge resort fees defend them as a vital revenue generator.
Booking.com started charging hotels commissions on these resort fees in July in some parts of the world, and said it would delay implementation in the United States until January 1, 2020.
Some hotels have dropped out of Booking.com because of its stance over charging hotels commissions on resort fees.
Asked whether Expedia Group is counseling hotels to drop out of Booking Holdings and to give more room availability to Expedia, Ranque said these are “private conversations.”
Most hoteliers are unaware of Expedia’s new policy of pushing their listings lower in the sort order on Expedia’s pages based on their resort fees. And the new algorithm that takes resort fees into account is being tested, and is rolling out in stages, so not hoteliers will see the changes immediately.
After the session at the Expedia conference, a hotel executive who works for a Marriott property that charges resort fees said she hadn’t known about Expedia’s new stance, and hadn’t yet noticed. any impact. Her property indeed charges resort fees, but also has started paying Expedia extra as part of its accelerator program to appear higher on the online travel agency’s pages.
Not everyone supports Expedia’s middle-of-the-road action on resort fees. After all, Expedia isn’t forcefully calling on hotels to be more transparent, and isn’t including resort fees in the basic room rate that its customers see online, but Expedia is indeed forcing some hotel listings into the netherworld of pages two, three or four on its sites.
Too little too late!
— Dhiren Fonseca (@Dhirenf) November 13, 2019
Photo credit: Expedia Group's Cyril Ranque spoke about the company's new action against hotel resort fees at the Expedia Explore '19 partner conference in Las Vegas November 14, 2019. Expedia Group