Commission on Resort Fees; Who's Paying the Cost?
Updated: May 14, 2020
In a surprise change of events for both hotels and Booking.com employees, news broke that Booking was going to start charging commissions on resort fees. In discussing with many of our hotels and colleagues, disgust and anguish against the new move at the cost to hotels especially with no warning. Who is the victim with hotel resort fees? Is it the guest or in this case, the hotel?
Resort fees are useful for hotels to help offset the little extras making the guest stay pleasant, unique, and generate repeat business. By providing free coffee, newspapers, slippers, robes, WiFi, pool, spa, and gym access amongst a plethora of other unique and branded experiences, these amenities help to set a hotel apart from their competition.
If the commission is now applied to these auxiliary services, does this mean the resort fee will also increase, for hotels to sustain their current profit margins? Time will tell. Or will limited service properties win the day as they do not typically charge these types of fees and ‘pricing’ will be more transparent for consumers to choose between the two?
If this is a power grab where Booking Holdings represents about 35% share in North America vs. 65% internationally, when will OTA’s start charging commission on the mini bar, spa and restaurant spend? I agree with Vijay Dandapani, CEO of the Hotel Association of New York City, “Booking’s adding a commission to that is akin to tacking on a charge on to a range of other products and services guests consume at a hotel after checking in, and will only increase the cost to the consumer while unfairly penalizing the largest customer base: hotels.”
Is the guest going to lose out on certain services, since the hotel can’t afford to keep them?
Is the OTA the only and true winner in this scenario?
In the latest article by Skift, Cyril Ranque, Expedia Group’s president of lodging services, is quoted, “They (customers) book it and then all of a sudden they get hit by a series of fees that the customer has no choice in paying. So that’s why when we really think about the health of the travel agency business, it’s not really good to not tell the customers in a clear way.” – is this a fault of the customer not reading the fine print or on the OTA for not displaying the fee to win their own online price war? Innovation in online booking has improved leaps and bounds, yet we are unable to clearly show the customer a simple resort fee?
For those revenue managers and directors overseeing full-service properties with resort/city/facility fees, should they now rethink their distribution strategies taking into account who is charging commission on resort fees?
Our stance at ERC: While the news is surprising, it has not been confirmed by Booking on the timing of the roll-out to charge on resort fees. The backlash has been great against Booking surprise move to charge on other items vs. just room only. One thing is for certain, any services or add-ons that are included in the Booking platform will be charged commission. Be careful what you add from a hotel as you will pay commission on that ancillary service. For example, you may be persuaded to add breakfast as an add-on but be aware you’ll be paying commission on that whereas if the guest arrives and pays directly, no commission!
Epic Revenue Consultants
Are you interested in learning more about what Epic Revenue Consultants can do for you? Our team of experts has experience across the United States in primary, secondary and tertiary locations with hotels from economy to upper upscale. Our track record speaks for it self, 12% growth in RevPAR and over 25% savings in OTA compensation. We drive top-line revenue but also look at the overall distribution costs to maximize profitability for your hotel. Finally, our cloud-based business intelligence tools, Epic Reporting, are best-in-class in the industry. Give us a call today @ 917-524-8118 or e-mail us at email@example.com!