Many people find travel agencies such as Expedia, Booking.com, Airbnb, Trip.com, Priceline, Orbitz and Agoda that have a significant market share in booking a hotel. However, expensive rates to customers and their high commission, typically 10 percent to 15 percent on travel agency hotel chains, triggered a direct booking campaign. Further, the Compagnie indirectly criticized Expedia’s high commission rate on independent hotels as 15 percent to 30 percent.
Still, Expedia has potential for independent hotels because customers will continue to use online travel sites for a special discounted rate and convenient two-way payment—pre-pay and pay the hotel directly. So, not expected to change the commission rate even though big hotel chains have tried to push lower commission rates along with direct booking campaigns.
The network of hotel business
Hoteliers ran their business in partnership with travel and online travel agencies. For example, big hotel chain Marriot and Expedia has been worked together for long times with 18 percent hotel commission fee agreement between them. Travel agencies such as Expedia, Bookings, American Express Global Business Travel, and BCD travel charge travel commissions to hotels. This network has progressed based on collaboration, expanding the US hotel market and opportunities for attracting customers.
What is commission rate
The commission rate is calculated as a percentage of the total booking cost by travel agents and OTAs and transacted between hotels and online travel agencies as fixed rate when produce a sale. The commission rate could be varied based on the size of hotel and room’s popularity. If a hotel is a member of Expedia’s service, the Hotels should pay the specific commission rate to Expedia according to the rooms they sold. The type of commission rate model includes straight commission (Sales x Commission rate = Income), base plus commission(Base salary + (Sales x Commission rate) = Income), and draw against commission(Sales x Commission rate) – Advance pay = Income).
Structure of Expedia’s income
- The commission model is divided into the merchant and agency models.
- The agency model brought Expedia’s huge profit nearly half of total income in 2019.
- The commission on hotels is a less-risk and profitable business format for Expedia.
- Expedia’s primary income derived from booking accommodations as 70 percent.
- Expedia operates a package program with travel agents by paying commission to travel agents.
Booking accommodation as reselling is Expedia’s primary income by buying bulk hotel rooms at low prices. Expedia Group owns many brands such as Rxpedia.com, trivago, Travelocity, Orbitz, Hotwire.com, HomeAway, CarRentals.com CarRentals.com. The commission on hotel is based on the exposure of hotel in Expedia’s website. The merchant model refers to selling rooms directly to customers through bulk purchases as wholesale.
Expedia commission rates
- The minimum commission rate is 10 percent
- The typical commission 15 percent to 30 percent
- The commission o big brand hotel chain is 10percent to 15percent
These rates of Expedia are static rarely negotiable except for big hotel chain as Marriott. We can be easily inferred independent hotels pay more commission to Expedia rather than big hotel chain. Also, detailed rates can be differentiated depending on hotel’s demands and OTA’s discount option. In addition, in some OTA charges additional commission on options such as breakfast, and parking.
Compare the commission with other Online travel agents (OTA)
Online travel agency (OTA) provides various products including hotels, pakage, cruise, car rentals. The different commission rate is a critical determiner for the hotelier to reduce costs. Expedia relatively has higher commission rate (The maximum commission rate varies by 10%) rather than Booking. However, the detailed rates could be varied according to city and states.
Why do people use Expedia?
Expedia is an affiliate company for hotels to boost their sales including bulk selling to Expedia. The payment system in Expedia is convenient and risk-free for concealing and modifying reservation before check-in. Also, the website shows customized possible hotels options quickly with reasonable room rates, last-minute travel deals and bundle discounts for people who don’t know a specific hotel for their travel destination.
Conclusion
Overall, the hotel commission rate of Expedia is from 10% to 30% (10% to 15% for big brands) and showed a higher commission rate for independent and low-brand hotels. Regardless of the not cheap commission rate, the customer’s sustainable demands on Expedia are expected to continue unless over half of travelers would not use the internet to plan their travel.
Frequently Asked Questions
1) How much is typical a hotel commission?
The typical hotel commission is from 15% to 30% but the commissions have ascended consistently in the last few years.
2) Is there any additional hidden fee from Expedia?
As a rule, the fees payable to Expedia are indicated on the website, not like CheapTickets, Orbitz, and Travelocity. They are charging a phone booking fee of $25 as an extra charge.
