Expedia has the potential to be successful with 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, commission rates are not expected to change even though big hotel chains have tried to push lower commission rates along with direct booking campaigns. ..
The network of hotel business
Hoteliers have been collaborating with travel and online travel agencies for a long time. This has helped expand 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 commission rate for a big brand hotel chain is typically 10 percent to 15 percent.
Expedia’s rates are usually not negotiable, except for big hotel chains like Marriott. Independent hotels pay more commission to Expedia than big hotel chains. Also, detailed rates can be differentiated depending on hotel’s demands and OTA’s discount option. In addition, some OTA charges additional commission on options such as breakfast and parking. ..
Compare the commission with other Online travel agents (OTA)
The 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 that provides hotels with bulk discounts on rooms and other services. The payment system is convenient and risk-free, and the website shows customized possible hotels options quickly with reasonable room rates. Last-minute travel deals are also available.
The commission rate for 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.
A typical hotel commission is typically about 10%.
The average commission for a hotel room is 15 to 30 percent, but the commissions have increased in recent years.
There is no additional hidden fee from Expedia when booking airfare through the company.
Expedia is charging a $25 phone booking fee as an extra charge. ..
