Booking.com will soon begin to charge hotels a commission on the resort fees they collect from consumers in an effort to combat the practice. For tourists, it could provide hope that they will finally be rid of these pesky fees.
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The travel-booking site will start charging U.S. hotels an additional commission, travel-industry website Skift reported. The new policy will be rolled out gradually, starting this June. Booking.com reportedly began notifying hotels of the change last year.
The policy will also apply to fees hotels charge for specific services such as a Wi-Fi, which often come as a surprise to weary travelers. “Booking.com’s insistence on charging commission on resort fees could make those fees less attractive to hotels,” travel blogger Gary Leff said.
‘Booking.com’s insistence on charging commission on resort fees could make resort fees less attractive to hotels.’
Booking.com’s BKNG, -0.49% move is an industry first. Other online travel agencies such as Expedia EXPE, -0.45% and Trivago TRVG, +0.00% have not announced similar initiatives. None of the travel sites immediately returned requests for comment.
The latest move is likely a response to consumer fatigue over these fees, said Charlie Leocha, president of consumer-advocacy group Travelers United. Booking.com is one of the largest hotel booking agencies in the U.S. and, as such, the impact of this decision will be enormous,” he added.
But the strategy could also backfire. Hotels could retaliate by adding the fees to the rates they advertise on Booking.com, while appearing to offer cheaper hotels on the travel-booking site’s competitors like Expedia and Trivago.
What are resort fees and why do hotels charge them?
Resort fees are charges that hotels will tack onto the final bill for a consumer’s stay. Sometimes, they are referred to by other names such as facility fees, destination fees, amenity fees or urban fees. They sometimes come as a nasty surprise to guests when they’re checking out.
“Resorts charge these fees ostensibly to cover costs associated with amenities like hotel gyms and pools,” said Christine Sarkis, deputy executive editor at SmarterTravel.com TRIP, -0.68% “They’re a relatively unregulated way to get more money out of every hotel guest.”
There’s not much consistency to how they’re added to the final bill. Some hotels will list resort fees under taxes, even though the government isn’t actually collecting this money. In some cases, the fee may be charged per-room, per-night or even per-person staying at the hotel.
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For hotels, the fees serve multiple purposes. Since most travel booking sites do not include them in advertised room rates, it can make a hotel appear cheaper. Additionally, hotels don’t have to pay a commission to the travel sites for this revenue. Until Booking.com’s latest move, that is.
‘Really they charge hotel and resort fees because they’re a relatively unregulated way to get more money out of every hotel guest.’
As a result, a growing number of hotels in recent years have begun charging resort fees. Mandatory hotel fees increased 11% between 2017 and 2018, according to data from ResortFeeChecker.com, a website that tracks these fees.
The fees are especially concentrated in popular tourist destinations. The number of hotels in Hawaii charging these fees has soared from 12 in 2007 to 111 in 2018, according to booking website Travel Hawaii.
But even hotels located in urban areas without swimming pools are charging these fees. “Other hotels are doing it, so displaying all-in pricing would make them look more expensive to consumers than competitor properties even when total price is the same,” Leff said.
In a statement to MarketWatch a spokeswoman for the American Hotel and Lodging Association said that hotels charging resort fees follow guidance from the Federal Trade Commission and will provide information on the fee and included amenities when a consumer books directly with them.
“It’s important to note that third-party travel websites may not provide the same transparency and cost break-outs as booking directly with the hotel,” the spokeswoman said. “That’s one reason we encourage consumers to book directly with the hotel or a trusted travel agent.”
Consumers have little protection from resort fees
Not including the resort fees in the advertised room rate is tantamount to false advertising, Leocha argued. It also makes it more difficult to difficult for consumers to compare prices, since the fee is often listed in the fine print or disclosed later on into the booking process.
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Lawmakers and regulators have allowed the practice to continue. The Federal Trade Commission released a report on resort fees in 2017. The agency found that “separating mandatory resort fees from posted room rates without first disclosing the total price is likely to harm consumers.”
Consumers should consider calling hotels ahead of time if fees are not clearly mentioned at the time of booking.
The FTC did warn 22 hotels that the fees were not adequately disclosed and could violate the law, but in 2015 ruled that the fees didn’t need to be included in hotel rates. The agency has not taken steps since then to crack down on the practice, and has not issued hotels any warnings under the Trump administration.
Attorneys general from many states are investigating the issue.
In the meantime, the onus is on travelers to stay abreast of what fees they’re being charged. Consumers should consider calling hotels ahead of time if fees are not clearly mentioned at the time of booking or look explicitly for hotels that don’t charge them.
If a consumer is charged a fee they were not told about in advance, they can pursue a refund. “You can also try pushing back against it,” Sarkis said. “We’ve seen a few cases where having a strong, but polite, opinion about these fees gets them reduced or removed.”
Shares of Booking Holdings are down 0.32% year-to-date, while the S&P 500 SPX, +0.14% and Dow Jones Industrial Average DJIA, +0.37% are up 12.58% and 9.27% respectively.
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