Fee Wars II? Expedia plans to remove book-by-phone charges

keypadGet ready for round two of the online travel agency fee wars. This spring, the major online travel agencies eliminated their online booking fees. This morning, Expedia will announce that it will do away with its fee to book by phone.

That would make Expedia the only major online travel agency to offer fee-free telephone booking for air travel. By comparison, some online travel agencies charge as much as $25 per ticket to book via phone. Many airlines also apply as much as $25 in fees, per ticket, to buy by phone.

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I spoke with Expedia spokesman Adam Anderson yesterday to find out what this move means for customers.

How many Expedia customers book by phone?

While we don’t disclose specific customer numbers, from a percentage perspective, air tickets are usually booked online. The percentage of phone bookings for air tickets is in the high single digits. The percentage of hotel bookings made by phone is in the low double digits.

Cruise bookings are actually booked by phone the majority of the time. It is worth pointing out that more travelers use Expedia than any other online travel agency, so even a percentage in the single digits represents a large number of travelers.

I seem to remember a time not so long ago when booking by phone was free through an online travel agency. When did that change?

On our behalf, we implemented a phone booking fee in May of 2009. So this is a relatively new fee for Expedia, and one we are happy to eliminate.

What kind of an effect did your fees have on the number of customers who booked online? What kind of an effect do you expect the elimination of fees will have on the number of people who book by phone, going forward?

The golden rule is an obvious one: travelers don’t like fees. We’re travelers, too. We appreciate this. When you add fees, you diminish interest. We expect that consumers will appreciate knowing that they won’t be penalized for booking through Expedia by phone and will feel comfortable using whichever method they prefer.

Do you see this move as an acknowledgment that some customers prefer to book by phone, and that it doesn’t make sense to punish them? Or is Expedia becoming more like a traditional travel agency?

There are always going to be customers who prefer phone bookings to online, for a variety of reasons. Some travelers are less comfortable navigating a Web site. Some customers simply prefer to have a conversation with a live person. We want to make it possible for travelers to book with Expedia using any method they prefer, without incurring a fee for doing so.

How long have you been planning this fee change?

We have been analyzing this fee from the moment we put it in place.

I’m sure you saw Travelocity’s recent announcement about its new price guarantee. Is this a competitive response?

We did see that announcement. And we all read your skeptical reaction to it as well.

This is not a competitive response to Travelocity’s recent announcement. It’s a move to strengthen our leadership in the entire industry. We don’t feel that we are engaged in a continuing fee battle with other OTAs. On the contrary, we feel like we are setting the market rates – or lack thereof – and it’s up to our competitors to react. Expedia delivers the fewest fees to travelers. And we know that travelers appreciate it.

I can’t argue that eliminating fees is a good thing for customers. But if you lose all the fees, how does Expedia make any money?

In this case, we’d like to point out that Expedia was already charging a smaller fee than our competitors, so the impact to us isn’t nearly as significant as it would be to other OTAs. We believe that if we remove this fee, travelers will reward us with their loyalty.

What kind of evidence do you have that people shop for travel based on fees, surcharges, or even service guarantees. I thought they just cared about low prices?

Travelers are growing increasingly conscious of the fact that the up-front price of a plane ticket, or a hotel room, or a cruise cabin, can come with some expensive strings attached, depending on where you go to book your trip. It matters a great deal where you book.

Let me give a couple of examples:

A family of four that booked a multi-carrier flight through Orbitz online, and made a single itinerary change, would pay nearly $150 in fees. If that same family booked the trip with Orbitz by phone, and made a single change, they would pay $220 in fees. In both cases, the family would pay $0 to book through Expedia.

We have also recently added a feature to the Expedia.com Web site that gives travelers more clarity on what fees they will incur as they travel. We feel that the more visibility that travelers have about fees, the more they will turn to Expedia.

We have also recently added a feature to the Expedia.com web site that gives travelers more clarity on what fees they will incur as they travel. We feel that the more visibility that travelers have about fees, the more they will turn to Expedia.

(Photo: JonJon2k8/Flickr Creative Commons)

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