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Online Travel Agencies – The Rip-off Mendocino County and Other Destinations

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Did you know that when you book with an online travel agency, in almost all cases, a portion of your tax payment is just pure profit for the agency.

When you book online through a dot.com, you are charged a “bed tax” or “transient occupancy tax” on your accommodations if the property is in an area with such taxes. A good portion of that tax is not paid to the taxing jurisdiction. When the dot.com charges your credit card for a deposit or for the entire stay, they include bed taxes, which in San Francisco are 15%. However, the City only receives taxes on the net amount paid to the hotel. Generally, the hotel receives about 70% to 75% of the the actual amount you pay. For example, if you pay $200 per night, you credit card will be charged $230 including tax. The dot.com will send the hotel the “net” rate of $140 (70%) plus the tax on the that amount for a total of $161. The remaining $69 will be kept by the dot.com of which $9 was received as taxes. Since they did not actually house the guest, they do not pay this to the appropriate jurisdiction.

Transient taxes are desperately needed to provide policing, road repair, and other basic services. This is especially true for Mendocino County (with a total rate of 11%), which has lost three of its main industries: fishing, logging/lumber, and wood products such as Masonite production.

You should also know that just a few years ago most hotels and inns paid 10% commissions to travel agencies. Guests paid taxes on their total stay and the hotel remitted 10% of the overnight charge before taxes, assuring that their city or county received taxes for the actual amount paid by the overnight visitor.

One more thought: the discounted net rate paid to the inn does not save guests money. In fact online travel agency discounted rates are calculated into the rate schedules of hotels and inns which means, taken as a whole, guests are paying more for their accommodations than they would pay if all accommodation were booked directly with the hotel or chain. Hotel guests are supporting huge online travel agencies, their advertising budgets, and profits – at a substantial cost to themselves and to their destinations – the cities, towns, and counties they visit. If the hotel is in business, they are ok. It is the destinations and hotel guests who are paying.

Please support your favorite destination by shopping however you want, but make reservations at the hotel’s website. And call their 800 number if you want the hotel to match an “online special” you find at an online travel agency.

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This article was written by stanford