The Real Deal National

Resort fee wars: Booking platforms are taking on the controversial hotel practice in very different ways

Resort fees have been used to avoid commissions and "game the system,” critics say
June 29, 2019 03:00PM

Booking.com CEO Glenn Fogel and Expedia CEO Mark Okerstrom (Credit: iStock)

Booking.com CEO Glenn Fogel and Expedia CEO Mark Okerstrom (Credit: iStock)

Resort fees, mandatory extra fees that often don’t appear in search results and that travelers sometimes only discover at checkout, have been on the rise in recent years as hotels face economic pressures on multiple fronts. And online booking platforms are now responding.

Booking.com shook up the industry last month by announcing it would start charging hotels commissions on such fees, reclaiming what it views as its fair share of the revenue it generates for them. Competitor Expedia this week announced that it would be taking a different tack: Instead of taking a cut itself, it would start downgrading hotels that charge such fees in its search results.

“Booking’s unilateral and, frankly, blunt move is pretty typical of their playbook with hotels,” Expedia Lodging Partner Services President Cyril Ranque told travel trade publication Skift. “This is simply not how Expedia Group conceives the partnership we want to have with the lodging industry.”

The two platforms’ approaches strike at the two main reasons that these fees exist at all: To avoid paying more commissions to intermediaries, and to boost hotels’ position in search results by reducing the up-front room rate. Hotels might now have to give up one benefit or the other.

The changes come at a time when hoteliers have increasingly turned toward resort fees as a way of boosting asset value, despite claims that it is anti-consumer in nature.

“As you get later in the cycle, [investors] end up really sharpening their pencils to make deals work and when they do that, they sometimes end up cannibalizing themselves,” HVS president and CEO Stephen Rushmore Jr. said this month at NYU’s annual hospitality conference. [Skift] — Kevin Sun