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There’s a lower rate on my hotel bill — so where’s my refund?

February 28, 2008

Unpleasant surprises are part of almost every check-out process. There are extras like resort fees, taxes and previously undisclosed surcharges that are invariably tacked on to your hotel bill. So when Bithi Chatterjee discovered her invoice was lower than she’d expected, she thought it was a fluke. She was right.

I recently booked a three-night hotel stay online through Orbitz, and I was given a rate of $69 a night, plus $32.45 in taxes and fees, costing $239.45 in total. There were no additional service fees indicated other than the $32.45, and they charged this price to my credit card.

Upon checking out of the hotel, I was given a receipt indicating that the hotel charges were $54.51 a night, plus $11.46 in taxes, which adds up to $174.99, a price difference of $64.46. The difference in price when you compare the per-night charges are $43.47.

Is Chatterjee owed a refund? Perhaps.

I called Orbitz to see if I could receive some money back, and they told me that this cheaper price receipt should not have released to me, and that this rate is one that is negotiated between Orbitz and the hotel. I was told this not only by two service representatives, but also by a supervisor.

They refused to refund any part of the price differential, saying that it was necessary for their operating costs. I would be OK with the $43.47 amount, since clearly, part of the $32.45 in taxes and fees I was charged includes, in large part, Orbitz fees.

My question is, am I justified in asking for some money back? Or is this just how they do business, and I need to accept it?

The short answer is: accept it.

Here’s why. Chatterjee was shown the bulk rate that Orbitz paid the hotel. Orbitz, like most major online agencies, buys hotel rooms at a bulk discount and then passes part of the saving along to you. That’s how it makes a profit. It uses its buying power to negotiate a better deal than any single traveler could and then marks up the price of the room.

The hotel shouldn’t have shown Chatterjee the bulk rate, of course, but Orbitz was under no obligation to refund its profits, either.

This type of case crosses my desk from time to time, and I have to credit Expedia with giving me the best answer to this problem. Several years ago, I asked the online agency about a customer’s request for a refund. He’d been shown the bulk rate by the hotel and wanted his money back.

“We’d be happy to extend that rate to the customer,” my Expedia contact told me, “if he wants to buy a hundred rooms at a time.”

Christopher Elliott is the author of Scammed: How to Save Your Money and Find Better Service in a World of Schemes, Swindles, and Shady Deals. Critics have called it “eye-opening” and “inspiring” — it’ll “grab your attention and won’t let go.” Order your copy now on Amazon, Barnes & Noble or iTunes.

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11 comments

  • Jesse

    Can’t win them all.

    This is just business as usual. The fact that the customer was shown the bulk price doesn’t mean, he/she is entitled to them. Customer had previously agreed to a higher price, so if anyone graciously wants to refund it, well, but the agreement had been done with a higher price already.

  • dr_nigel_c

    Thanks for posting about this subject — I too have had my fair share of questions (and sometimes complaints) from guests on this very subject, and you covered it nicely.

  • Joe Farrell

    No has looked at this from this perspective – who is Orbitz the agent for?

    Do they represent their customer, the person who pays the bill, or, do they represent the person who sells the travel?

    If, as I suspect, they advertise as if they are an online travel agent, then, in traditional master-servant law, the servant must disgorge all profits earned that are not disclosed and agreed upon by the master. It is expected that the seller of travel is paying a commission to the agent making the transaction available – however – if you pay a fee to that travel agent – and it is a substantial fee [not $5] and the commission is not disclosed – that is a whole nuther ball game. Depending on the booking fee you paid – it is an open question as to whether the agent needs to disclose the profit to the master, i.e., the customer. Traditionally a 10% fee was credited by travel agents on the amount of the net fare. Those amounts have essentially gone to zero in most arenas except the cruise business.

    If Ms. Chatterjee paid a $5 booking fee – then I seriously doubt she has much of a case – if she paid $20 or $30, then its a ‘nuther issue.

  • Jasper

    I wish they were equally straightforward when the opposite happens. This blog prooves they don’t.

  • MJ

    In case hotels, I would think that Orbitz is more of a reseller than an agent… to me the process seems to be like Orbitz buys rooms in bulk, and then onwards, is Orbitz merchandise to sell/gift/splurge as they want. They are free to give discounts or add overheads as they wish… The original seller (the hotel) has lost all rights to control the price thats charged for the room, once they sold it off to Orbitz.

  • http://www.tropicaltravel.net Annette from Tropicaltravel.net

    Great information and post. Thanks for helping explain!

  • Meredith P

    Orbitz, Expedia and other agencies of this nature are what is referred to in the business as “Wholesalers.”

    It’s like BJ’s or Sam’s club. You buy in bulk to get a lower price per item. In the case of travel services, the savings are still passed onto the consumer though they do not get the “wholesale rate” negotiated between the Wholesaler and the Property.

    Tour Operators are another form of Wholesaler.

  • Amy

    Hotel employees everywhere thank you for this simple and clear explanation!

  • http://www.ffocus.org bruceincharlotte

    It would seem that this exactly blows away their reason for immunity to state sales taxes! Or am I missing something?

  • Katie

    Bruce – this explanation actually does explain why they would be exempt from sales taxes. Because they are in essence reselling the rooms to the end user, then they are exempt from the sales tax that they would normally incur.

  • larry bradley

    Just returned from a trip to the northwest coast of Costa Rica. Got a really nice hotel with only 20 rooms, a great pool area, bar, and restaurant for $94 per night. The hotels own web site showed a minimum rate of $170 for my dates of stay. Upon checking in, the preprinted room reservation showed $65.12. Since this has previously happened to me on several occasions, I knew immediately what Expedia had paid for the room. Did not bother me a bit. I still got a great deal.

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