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Defends New Hotel Commission-Free Model responds to backlash of outraged travel agents

eTN Staff Writer  Jan 16, 2009

MIAMI, FL - With the emergence of the "virtual" or Online Travel Agencies (OTAs) came speculation and concern over the "death" of the brick and mortar travel agency community. Such a metaphoric death would leave many travel agents without employment and the travel industry without an integral part of its foundational infrastructure.

The main issue that the team at has studied is the high commissions hotels are required to pay OTAs. The original intention of the travel agent commission was to compensate the agent for sending a customer to a particular hotel. That process evolved into customers referring to an OTA and searching for a list of hotels in any particular area and then proceeding to book their hotel stay. In today's online environment, a fee and commission may be justified in the latter case if the customer has never heard of the hotel or is unfamiliar with the location that they are traveling to.

A fee and commission is not deemed fair, however, when the customer knows where they want to go and which hotel they would like to stay in. What real service is being provided by the OTA in that instance? A hotel is required to pay 25 to 35 percent of its booking revenue in commissions to an OTA even if the customer had already decided that that specific hotel was the one they wanted to patronize but were unable to find the hotel's website in order to book directly. Though initially reluctant, hotels tolerate these high commissions simply because they just cannot compete with the exorbitant marketing budgets and team of search engine experts that the OTAs have the luxury of maintaining.

"We believe that travel agents are and will continue to be an essential element of the travel industry.'s new commission-free model is meant to connect customers who already know where they want to go and stay with the destination and hotel that they are looking for without charging the hotel any commission," explained Ashwin Kamlani, CEO of . responds to backlash of outraged travel agents
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