Only hotel executives and bean-counters like hotel fees — can sales commissions change the system?
Nobody —and I repeat, nobody — outside of hotels themselves, and perhaps their shareholders, likes resort fees.
Even people I know who work at hotels dislike these fees. Hotel workers who have contact with the traveling public hate them. When they work with customers who have been blindsided by the costs, all thoughts of good customer service go out the door. Even to hotel guests who know fees are coming, these sneaky fees leave a bad taste in travelers’ mouths. They are always unhappy to see the total on their bills.
Hotel companies ignored FTC guidelines and informal letters
But these mandatory hotel fees generate pure revenue for hotels. They are added on to any advertised price if disclosed even in small faded type on websites. And, they are getting worse. Now even big-city hotels add them. Travelers discover them identified as “facility” fees, urban fees or something similar.
In 2012, the U.S. Federal Trade Commission (FTC) warned hotels that they should include mandatory fees in their advertised rates. However, the past “consumer-friendly” administration didn’t issue rules and no legislation was passed. Even with active consumer voices in Congress and at the FTC, no changes were made to force hotels to honestly advertise mandatory hotel fees. And whichever “side” you are on politically, we can agree this current White House is not considered pro-regulation.
Some state Attorneys General are beginning to go after these fees with lawsuits
The Washington, DC, Office of Attorney General (DC OAG) took Marriot Hotels to court in a lawsuit claiming that the hotel operator has been misleading their guests for years. And the Nebraska AG has taken the Hilton Hotel Corporation to court for almost identical reasons. Both of these AGs are members of the National Association of Attorneys General (NAAG) that has been studying this issue for the past two years.
These judicial actions are not accidental. They have been pushed by Travelers United and a coalition of other consumer groups and advocates. The coalition encouraged NAAG to take action as part of an across-the-board effort to get some truth in advertising back in hotel rates. Travelers Unites spearheaded the actions with the FTC and with the Senate, where a bill was introduced to Congress. Unfortunately, neither the regulatory or legislative efforts have borne fruit yet; however, the efforts at bringing these abusive advertising practices to the attention of NAAG have.
Online travel agents are examining mandatory hotel fees
Now, Booking.com is going after resort fees in a different way: by charging hotels commission on them. And Expedia is reportedly looking into doing the same thing. These travel agencies lose millions of dollars every year because the resorts fees charged travelers are not effectively disclosed. Travelers hate being surprised, so these fees generate lots of negative vibes for travel agents when they book travelers into hotels that blindside travelers with extra resort fees.
Most travelers think that once they have paid for a hotel, they will not be scammed for extra money by the hotel itself. However, that is exactly what has been happening for the past two decades while Travelers United and other groups have been trying to fix the system.
Many travelers who don’t use travel agents might think “Who cares?”
Well, because charging commissions might eliminate one of the major reasons hotels like mandatory resort fees. Commissions are a big deal. Airlines, in general, have eliminated basic commissions — i.e., payments to agencies. Most hotels, especially those which are part of a chain or larger independents, still give travel agencies a small cut of booking (a commission). Most advertised prices include that amount, except that resort fees haven’t been included.
Individual traditional travel agents, who receive a commission for booking hotels after the fact, have no ability to demand such commissions. But, if larger OTAs (Online Travel Agencies) start demanding commission payments on these mandatory fees, larger agencies or consortiums might do the same thing.
Or, perhaps, by using the carrot and not the stick method, travel agencies might feel empowered to give preferred status to hotels that include resort/facility fee commissions. (Some hotels, especially urban hotels, already do waive fees for preferred agency groups.)
In addition, some hotel wholesalers are owned by OTAs — Classic Vacations, for example, is owned by Expedia. If they, too, demand a commission on resort fees, then a major impetus for the fees goes away. Hotels, as much as they love the fees, know they’re not popular. So if the hotel companies don’t make any additional money by having them separate, those same hotels might decide they’re less attractive.
In the end, the overnight price ends up the same. Knowing the real rate upfront will be a good thing for travelers. Period.