UPDATED: Orbitz cuts hotel booking fees By Dennis Schaal / April 22, 2009 Share 1 -- Setting off what could become another round of online travel agency price wars, Orbitz reduced booking fees on global hotel bookings made by July 15 and began to display the total price of hotel bookings in initial search results. In the merchant, or wholesale, model, online agencies receive hotel inventory at net rates and then add their margins to get a base price. Hotels require that online agencies mark up to the base price to ensure that hotel websites do not get undercut. In addition to their markup, online agencies add a service fee, which they bundle into "taxes and fees." Orbitz's booking fee cut comes from those service fees. Orbitz is the first online agency to display the total price of the hotel up-front. The other online agencies require consumers to click through to the details page to view the total price of the booking. Orbitz spokesman Brian Hoyt said Orbitz Worldwide CEO Barney Harford has "a laser-like focus" on improving Orbitz’s hotel business and decreasing the company’s historic dependence on air sales.Hoyt said Orbitz’s hotel initiatives, including its recent "Biggest Hotel Sale Ever," are an effective way to stimulate consumer demand.On Wednesday afternoon, a search for a standard room at the Sheraton Manhattan at Times Square produced the following results:Orbitz showed a total price of $208.90 ($179.10 base price plus $29.80 in taxes and fees) in the initial display results.After clicking through to the Travelocity details page, Travelocity offered the room at a higher rate ($215.27). Travelocity started at the same base price as Orbitz, $179.10, but charged a higher booking fee ($36.17 in taxes and fees).Expedia offered the lowest price of the three online agencies at $208.01 ($179.10 plus $28.91 in taxes and fees). Asked if Expedia had matched Orbitz’s booking-fee reduction, Expedia spokeswoman Katie Deines said it is Expedia’s "normal course of business to ensure we have the lowest total price. That is our primary focus."Deines said she didn’t expect any company announcement on the hotel-fee reduction issue at this time.Deines added that the way Expedia displays hotel pricing -- showing the base price only in initial search results -- is the industry standard, and that Expedia "has no plans right now" to alter it.The story was updated to describe the wholesale model online agencies use for their hotel business.