a very misleading travel website

TravelersFirst.org is a very misleading website that exists for a single purpose, to get signatures on a petition in support of the so-called Internet Travel Tax Fairness Act sponsored by several large OTAs (online travel agencies such as Orbitz, Expedia, and Travelocity). While I don't take a position either way on that proposed legislation, I do object to misleading statements in support of the act. The basic issue is that cities would like to collect sales tax on the full rate for rooms booked through OTAs, and the Act would prevent this from happening.

To demonstrate the facts of the matter, let me do an actual comparison based on a booking for a 6th Avenue View room at the Ritz-Carlton Central Park in New York for one night, August 14. These were the quotes as of 12 noon on July 14th.

Orbitz will charge you $795 for the room + $121.56 in taxes and fees for a total due at booking of $916.56.

If you book direct through Ritz-Carlton, you will pay the same $795 for the room + $120.77 in taxes for a total payable at check-out of $915.77.

Here's what the OTAs aren't telling you:

• Orbitz charges you up-front, then remits their NET rate to the hotel. If the NET rate is 80% of the published rate, Orbitz keeps 20% as profit.
  
  
• Ritz-Carlton pays sales tax to New York based on the NET received from Orbitz, and New York misses out on much needed revenue. But you're still paying "taxes and fees" on the full 100%. What's happens with the the sales tax on the remaining 20% that doesn't go to New York? Answer - Orbitz keeps it as a "fee", adding to the 20% they're already marking up the room.
  
  
• The proposed legislation fights the attempt of cities like New York to collect the full amount of the sales tax that is collected, rather than allow the OTAs keep it as a "fee."

So despite the alarmist headlines of the website, here are some facts:

• Converting Orbitz's "fee" into sales tax to New York will not make your stay more expensive.
  
• Sending the sales tax to New York will actually help the local economy of that city.

And while I'm on the subject, I can get you a much better deal for this same booking at Ritz-Carlton Central Park:

• I can get you upgraded at time of booking. You'll pay $745 for a Deluxe room and be upgraded to the $795 6th Avenue View room.
  
• You will receive a complimentary Daily American breakfast for two, in BLT Market or via room service. Free just by booking through a Virtuoso travel consultant.
  
• You will receive an additional $100 hotel credit to be used for any charge within the hotel except room and tax, another Virtuoso amenity.
  
• You won't pay a cent until you check-out.

Ritz-Carlton Central Park (search here on Google)

copyright (c) 2010 by David Ourisman LLC. All rights reserved. If you have comments on this column, or questions about booking travel, email me or visit my website.
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beware of orbitz...

I participated in an online forum last week on the subject of booking luxury hotel rooms online. My assertion: you can usually get much better value booking from a travel agent specializing in luxury travel, especially an agent who is a Virtuoso member. My assertion was challenged by another forum participant who urged readers to forget my advice. "[E]asy to book any of the luxury ones on-line," he wrote. The discussion continued, with another member telling of bargains he had gotten on Priceline. He also mentioned skyauction.com as a source of "excellent hotel luxury values."

So I did an experiment (which readers are encouraged to duplicate on their own). My methodology was as follows. I simulated three identical bookings (on Friday, Dec. 8 at 12 noon PST) for the lowest priced "luxury hotel" in Paris offered by skyauction.com, the Splendid Etoile (pictured above): one room for two guests for two nights, checking in March 15. (Skyauction has a two night minimum).

(1) I simulated the booking on skyauction.com.
(2) I simulated the identical booking on orbitz, travelocity, and expedia (the Big Three).
(3) I simulated the identical booking on Sabre (a GDS used by travel agents that shows availability and all available rates).
(4) I compared the rates, payment terms, and cancellation policy.


The results

(1) Skyauction charged a base rate of $245 a night, adding $32 per night for taxes and service fees, and a $20 processing fee. Total cost: $574. This amount is charged immediately to your credit card, and the reservation is NON-CANCELABLE and NON-REFUNDABLE.

(2) Orbitz charged a base rate of $318.42 a night including breakfast, adding a total of $57.95 in taxes and fees. Total cost: $694.44. This is a pre-paid rate (meaning they charge this immediately to your credit card). If you cancel more than three days prior to arrival, Orbitz charges a $25 cancellation fee. Within three days, you are charged for one night.

By the way, neither Travelocity nor Expedia showed availability at this hotel.

(3) The Sabre GDS showed all the available rates. The "Exclusive Hotels Best Rate" was 119 EUR ($158) with taxes included. Total cost in USD: $316. You guarantee the room with your credit card (your card is not charged), and you can cancel without penalty up to 3 days before arrival. Within three days, you are charged for one night.

(4) Another observation: Skyauction, orbitz, and travelocity give Splendid Etoile a four-star rating. Expedia gives it a three-and-one-half star rating. The hotel's own description on Sabre states that they have a three-star rating from the French Tourist Board.


My conclusions

(1) If you want the experience that a luxury hotel can offer you, take online promotions of luxury hotel values with a grain of salt. Make that a lot of salt! You would likely be quite disappointed with the Splendid Etoile if you are looking for upscale, luxury accommodations. A travel consultant who specializes in luxury hotels will have extensive knowledge and experience to guide you in the selection of a hotel.

(2) Beware of orbitz, even with their "low price guarantee." The "special negotiated rate" they quoted in this experiment was more than double what any travel agent in the world can get you.

(3) Beware of pre-paying for your room. When you prepay an online travel agent such as orbitz, you may be booking a NET rate that orbitz has negotiated with the property and is marking up. How much is the markup? I don't know, but compare prices and make your own guess.

(4) Do your internet shopping first; then go to your travel agent and see what he or she can do for you. True story: A client recently came to me with a discount price she had gotten from the hotel's own website for a two night booking. I saved her 140 EUR (about $186) ... and got her free breakfasts each morning in addition, as well as a room upgrade upon arrival if available.


orbitz travelocity expedia luxury hotel sabre gds value online booking Virtuoso skyauction priceline travel consultant