Booking.com charges a flat 20% commission. Expedia is slightly higher, closer to 24 or 25%, and that varies by property. I think chains negotiate it in a lot of cases.
I don't suspect any collusion between the two, or attempt by either of them to get or keep their commission rates in any way in alignment with those of the other.
I've heard of the existence of some GDS channels who in negotiating with a hotel, will tell them, we want, say, $2,000 in commissions per year guaranteed, and paid to us up front before we even list your property. I've never had one try it with me, but the first time it happens, I'm going to tell somebody to pound sand. I ran a used bookstore and coffee shop years ago, dealt one time with a wholesale vendor that demanded 'minimum orders', quickly discovered Costco; and concluded that only a real wuss, an enabler, a codependent, a cherry having less than reasonable adult human resolve who's probably in at least one other abusive relationship, would even talk to such vendors rather than just hang up on them.
Hotwire operates on a different model altogether that isn't commission-based. They're more like a reseller. You make a certain number of rooms on each night, of various types, available to them at a lowball set price, and they resell them for whatever they can get -- which is usually at a markup -- then turn around and pay you the agreed-upon price as they pass the reservations along to you and the guests show up to check in.
Online travel agencies have been in existence as long as they have, are as lucrative to their stockholders as they are, and get away with what they do in terms of exorbitant commissions; because they discovered revenue management some time before the hotels themselves did. We were attached for far and away too long to assigning a 'shelf price' to our rooms, and too inflexibly sticking to it except for corporate and group rates negotiated by the individual hotel.
I don't suspect any collusion between the two, or attempt by either of them to get or keep their commission rates in any way in alignment with those of the other.
I've heard of the existence of some GDS channels who in negotiating with a hotel, will tell them, we want, say, $2,000 in commissions per year guaranteed, and paid to us up front before we even list your property. I've never had one try it with me, but the first time it happens, I'm going to tell somebody to pound sand. I ran a used bookstore and coffee shop years ago, dealt one time with a wholesale vendor that demanded 'minimum orders', quickly discovered Costco; and concluded that only a real wuss, an enabler, a codependent, a cherry having less than reasonable adult human resolve who's probably in at least one other abusive relationship, would even talk to such vendors rather than just hang up on them.
Hotwire operates on a different model altogether that isn't commission-based. They're more like a reseller. You make a certain number of rooms on each night, of various types, available to them at a lowball set price, and they resell them for whatever they can get -- which is usually at a markup -- then turn around and pay you the agreed-upon price as they pass the reservations along to you and the guests show up to check in.
Online travel agencies have been in existence as long as they have, are as lucrative to their stockholders as they are, and get away with what they do in terms of exorbitant commissions; because they discovered revenue management some time before the hotels themselves did. We were attached for far and away too long to assigning a 'shelf price' to our rooms, and too inflexibly sticking to it except for corporate and group rates negotiated by the individual hotel.
Originally appeared on Quora
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