Understanding the Expedia Commission: A Detailed Guide
Expedia, a well-known name in the travel industry, takes a significant portion of the booking revenue as a commission. In this guide, we delve into the specifics of the Expedia commission, including its percentage, what it means for hoteliers and airlines, and the challenges faced by businesses trying to compete with OTAs (Online Travel Agencies) in the digital marketplace.
What is the Expedia Commission?
Expedia charges a commission to both hotels and airlines for bookings made through their platform. This commission varies depending on the specific circumstances, such as the type of property being booked, the location, and the terms of the booking. Typically, the commission rate for hotels and airlines falls between 15% to 25%.
However, the exact commission rate that Expedia charges for individual bookings is not publicly disclosed. This lack of transparency can make it challenging for businesses to understand exactly what they are paying. It's important for hoteliers and airlines to understand that while this percentage comes out of the airline's or hotel's pocket, they do get the benefit of increased business through the Expedia platform.
How Does the Expedia Commission Affect Booking Prices?
When a customer books a room through Expedia, they typically pay a price that is very close to, or slightly higher than, the posted direct ticket price. The added cost is the result of the commission that Expedia takes. For example, if a hotel room is advertised at $100 per night for double occupancy, the OTA commission plus any additional fees can push the final price to $120.
Strategies to Compete with OTAs
Many small businesses have found ways to manage the costs associated with OTA commissions, such as using advanced channel managers. By integrating a reservation system that can link to external platforms, hotels and airlines can offer competitive rates to their guests while still retaining a portion of the revenue. This can be achieved by including the commission in the final price, as well as additional fees charged by the channel manager.
For instance, if a room is priced at $100 per night, the OTA commission and channel manager fees amount to $20. This makes the total rate that guests see $120. However, if they enter a discount code provided by the hotel, they can get the rate back to $100. If a guest forgets to apply the discount, the hotel can apply it on their behalf.
The Role of Google Search in Booking
Google search results play a crucial role in how hotels and airlines are discovered by potential customers. While your property will often appear in the upper right corner of a Google search with a “BOOK NOW” button and the names of major OTAs like Booking, Priceline, and Kayak, this can be a double-edged sword. On one hand, it's free advertising for your business; on the other hand, guests are more likely to book through the OTAs rather than directly with you. This is especially true since consumers have been led to believe that OTAs always offer the best rates.
It's important to note that it is challenging to outbid OTAs on Google, even when the search is for your exact property. As a result, you need to find ways to incentivize guests to book directly with you, such as offering loyalty programs and special deals.
Conclusion: Navigating the Complexities of OTA Fees
The Expedia commission, OTAs, and their impact on pricing and visibility can be complex and challenging to navigate. However, by understanding the commission structure and implementing effective strategies, hotels and airlines can maintain a competitive edge in the travel industry. Remember, while it's difficult to compete on placement in Google search results, direct bookings can still be more profitable in the long run.