After news broke last month that Booking.com would start
charging hotels a commission "on mandatory extra fees that customers are
asked to pay at the property," analysts pondered how the move might impact
the hospitality world's predilection for resort fees and other fine-print
Booking.com said the switch is an effort to provide "complete
"The best customer experience is when people know the
entire cost up front," said Leslie Cafferty, senior vice president and
head of global communications at Booking Holdings. "Hopefully this will
help continue to push the entire industry toward more transparency."
Lorraine Sileo, senior vice president of research and
business operations for Phocuswright, echoed Cafferty's sentiments, calling
resort fees a "big bait and switch."
"There is a gap between the price that's shown on an
OTA or metasearch ... and the actual price when you check out, and it can be
significant," Sileo said. "It makes sense that Booking.com would look
at this disparity and decide to dissuade this practice. And being that they're
the largest hotel OTA globally, they can do something a little more aggressive."
Henry Harteveldt, founder of Atmosphere Research Group,
called resort fees "a money grab and a way to hike the rate while
insulting the guest's intelligence."
Still, Harteveldt said Booking.com's motivation for the move
was not altruistic.
"It's not like Booking.com is the knight in shining
armor riding to the aid of their customers," he said. "What they're
actually doing is profiting off their customers' dissatisfaction with these
resort and facilities fees. Booking.com is going to hotels saying, 'This fee is
bad, but we'd like a cut of it, please.'"
He said hotels could try to push back by threatening to
reduce inventory on Booking.com. But with many properties highly dependent on
the OTA channel, he said that approach "would be tough" and could end
up hurting a hotel's bottom line.
Booking's Cafferty doubled down on the position that even
when factoring in the extra commission, Booking.com remains economical for most
"Properties use Booking because it's a far more
cost-effective platform than, say, creating TV advertising campaigns in
different languages all over the world," she said. "Booking invests
significantly in marketing to drive eyeballs to properties, and only if a
booking is made and a property generates revenue from Booking is a small
Meanwhile, whether or not more OTAs will follow in
Booking.com's footsteps remains to be seen. According to Harteveldt, it would
make sense for Expedia to take stock of the move and eventually emulate
Phocuswright's Sileo, however, predicts that Expedia may
take a more cautious "wait-and-see approach."
"The OTAs in general have margin pressure, especially
when it comes to the larger chains that have the ability to put that pressure
on them," Sileo said. "Expedia has a lot more chains versus Booking,
so it's a little different for them. I wouldn't close the door on [Expedia
following suit], but I don't think there's going to be an immediate copycat
reaction to this."
One player who has made similar moves to cut fees for hotel
guests, however, is Airbnb. The homesharing platform, which has significantly
grown its boutique hotel inventory over the past year, announced in late May
that it would require all hotel and traditional hospitality hosts that join
Airbnb after June 4 to adopt a new host-only fee structure. (Hotels in Japan
and China are exempt from the requirement, however, and the vast majority of
Airbnb hosts will continue to have access to a shared host and guest fee
Harteveldt said, "Airbnb does stand to win business
with this change, and in doing so, could increase the number of reservations
they drive to their hosts. More importantly, this could give Airbnb another
marketing advantage to communicate to guests."