Hotel Commissions On Tours — How Much Is Too Much?

I’ve just wrapped up an incredible two days in Kazakhstan, and managed to tour both Almaty and Astana for a bit, despite the limited time I had. I decided to arrange tours through the hotels in both cities in advance, since I wanted to be sure the experience was as seamless as possible given my limited time.

Both tours were great. I loved one of the cities, while the other city was just “meh” (I’ll share my thoughts on the two cities in a follow-up post).

I don’t want to throw the hotel or tour guide under the bus, but there was something that came up that surprised me. The more I think about it, the more I’m conflicted about how to feel.

When you book a tour through a hotel, do you expect the hotel to take a commission? I can see both sides:

  • On one hand the concierge should be viewed as a service, so I tend to think that by paying for a room at a hotel you’re paying for access to a helpful and knowledgable concierge
  • On the other hand, I realize many people work on a commission (heck, I’m no exception), so I don’t fault them for taking a cut

almaty

In general I’d prefer if their cut comes on the back end, much like with travel agents. For example, as an industry standard, when travel agents book hotels they’re getting a 10% commission, though consumers are paying the same regardless of whether or not they book through a travel agent.

I guess it’s also not unreasonable if the concierge charges some sort of a fee. At least I wouldn’t think twice about it, since I value the convenience.

However, during one of the tours I took, the topic of hotel commissions inadvertently came up. Towards the end of the tour I said “How much is it, and can I charge this to the room, or do I pay you in cash?”

She said cash would be great, and then said she’d pay the hotel their portion. She apologized for how expensive the tour was, saying that the hotel takes a big cut. I could immediately tell she regretted saying that and she apologized for bringing it up.

But naturally I was curious. She gave me her business card, and as a way of figuring out just how much of a cut the hotel was taking, I said that I’d be sure to tell any friends who visit to use her, and asked how much she’d charge directly for such a tour.

She said “about one third of the cost.”

I was a bit taken aback. When she said she’d pay the hotel their cut I figured it was maybe 10-20%. But the hotel is basically inflating prices and charging me about triple the cost of a tour? That seems a bit ridiculous.

Priced in USD it was still very reasonably priced (given how weak the currency here is), but at the same time something doesn’t feel right about the hotel taking two thirds of the money that I paid for an outside tour.

astana

Where do you stand on this — is it okay for hotels to charge undisclosed add-on fees/big commissions for tours they arrange, and if so, how much is too much?

Comments

  1. Ben, can you post her contact details, I will be in Almaty and Astana soon and would like to do a tour. Thanks, MEOW.

  2. It might not be only the hotel taking a cut but a tour company as welll she has to pay out. Pays to shop around/check Trip Advisor or other similar sights.

  3. The hotel performs a few roles for the guide that might justify the commission.

    Marketing agent. You most likely wouldn’t have found this particular guide if you hadn’t asked the hotel. She is paying them to market her services.

    Vetting service. I’m going to assume someone within the hotel at some point assessed your guide’s skill level, language skills, safety, etc. You get the picture. You’re getting a pretty guaranteed product from whoever the hotel recommends.

    All in one convenience. You get one stop shopping with little effort on your part. There is usually an upcharge for convenience.

    Cruise ships seriously upcharge their tours as well. Similar situations.

  4. You booked a tour through an expensive hotel and are shocked at being charged through the roof?

    On top of that, you needed a tour of the city instead of walking around and taking regular transit like a normal person.

    You are quite possibly the least travelled most sheltered person I’ve had the pleasure of reading about

  5. Unfortunately Viator does the exact thing. I book a hot air balloon ride over Luxor on Viator because none of the tour companies answer their phones and emails. I paid $150 per person. After the ride, I told club room attendant at Grand Sheraton and she told me it was a popular tour and the local tour companies only charge $55 per person if you go downtown and purchase it with cash. Viator is notorious for this and have not booked any tour with Viator since.

  6. Worked for an independent hotel for a few years. Expedia took 25 percent commission for room bookings. That’s how hotels.com can give 10 percent back to consumers plus portal cashback!

  7. Ben, I used to work for a luxury hotel chain you love, and we had to increase the commission from 15% to 20% due to higher cost of managing these vendors. I agree with @Willy, hotels act as the marketing agent, so we do all the work making sure the vendors pass our background test and follow our guidelines in servicing our guests. I never had people complaining about the price, because we hold these vendors to similar service standards. You can find cheaper vendors anywhere, but hotels can’t be the mediator if something goes awry.

  8. It’s not unheard of…

    Even the online guys like TripAdvisor/Viator take 20-30% on average but 50-60% is common for certain types of activites or locations.

  9. Ben — you provide an invaluable service reviewing airline products. I always check your blog before booking international flights. But I don’t think I’ve ever relied on your blog for information about other travel topics, such as selecting hotels, booking tours, sightseeing, etc. You don’t live in the same world that most travelers do. No disrespect – but if I was planning a trip to Kazakhstan, I’d be researching on line and in travel guides in advance to get ideas of what to see, how to see it, etc. It’s highly unlikely that I’d be staying at the Ritz Carlton, or using them to arrange a tour. You don’t have to do it that way – you can just go to the Ritz and have them take care of the details — but there is a high price for that convenience. If I go to the Ritz, I am not surprised that I am being charged Ritz prices.

  10. @Dani, you mention working for a luxury hotel chain which charged a 20% commission fee. Hotel @Lucky stayed out charged 67%. I previously hadn’t thought of what a “fair” commission would be, but if you worked for a luxury hotel that charged 20%, 67% seems outrageous in comparison.

    I’d be interested to hear others’ thoughts.

  11. Yes, hotels always want to make money in everything they offer you. While I understand you did not have time to do your own search and had limited time in these two places it pays off big way if you do your own research in advance. I spent 20 days this summer in Europe with my family and wanted to do several tours with the kids so they would learn about local history, etc… I researched a lot online and had fantastic guides in every tour we did. Yes, I was probably very lucky but I was happy to see that the time I spent online paid off.

  12. I always book my own tours. I usually find tours on Trip Advisor/Viator and then try to locate the local vendor to book direct so I know they get their full cut. The only part of tours that gets me is when they take you to a tourist trap market to try and get you to buy souvenirs. Can’t stand that but it seems to be the norm.

  13. When I saw the headline, the first thing that popped into my head was cruise ships.

    If you book a cruise ship excursion / tour, the mark-up is often 100% or more. The stated reasons for this are what Willy said above. Part of the convenience reason could be restated as laziness on the part of customers.

    You can do way better by doing just a little research on your own in terms of price and quality. Often you can find the exact same tour for half the cost or less. Or you can find something way better – usually meaning less people with more stops or an avoidance of the stops where merchants have paid the tour operator to stop – for the same cost or less. For cruises, the ports forums on cruisecritic are invaluable. This works for any place where a cruise ship stops – even places you wouldn’t normally think of like Rome. Fake reviews and comments are not as common as on tripadvisor or other sites.

  14. It’s exactly the same as you paying more than double to use the hotel car – yet you don’t complain about that inflation. Typical hypocrite. They charge extra because people like you can’t be bothered to do abbot or reasearch and go with the easy way out. Simple

  15. Whoa triple is a lot indeed… But the important thing is you know you will be safe.. And that’s a big deal in a country you’ve never been before… Why don’t you share this lady’s contact? Almaty and Astana are really exotic destinations after all

    Btw love your posts!

  16. In Beijing, our private 3-day tour guide told us that the hotel took 50% (so going through the hotel doubled our price). Since then, we have NEVER arranged another tour through a hotel. That is the FCQ’s department now. He takes great pride in getting a great tour at a great price though his online research. With the left over money, we can tip the tour guide and still have some left for souvenirs.

  17. I agree with elteetrav. Lucky, I think you are very interested in airlines. You put massive amounts of effort into figuring out all the intricate details of each airline. Your insights are interesting and very valuable. Not sure I really care that you are trying to fly as many possible airlines this year but that is what you want to do, so more power to you.

    You have admitted that it is more about getting there than being there for you. So your reports on excursions like tours of Beijing or Almaty are not that impressive. It really shows that you do not care as much about tours as you do flying because finding the best price and service is something you do automatically when flying or booking a hotel. Also, you have not built up a niche as the go-to guy to read if we want to find where the locals go while traveling. It really isn’t your forte.

    This blog is more focused on flying premium and staying at premium hotels while you are there. Not a lot of valuable information outside those aspects of travel.

  18. @ Barry — Of course there’s value in having a tour guide when you have limited time so they can show you the highlights, share the history and significance of a place, etc. If you’re somewhere for several days then it’s a different story, but when you just have a morning to see a city, you don’t think getting a guide is reasonable?

  19. @ Dani — I certainly don’t have an issue with a 15-20% commission, that doesn’t seem unreasonable. A 200% commission seems like a different story, though.

  20. @ elteetrav — And that’s all I’m hoping to be! As long as I’m your source for reviewing airline products then I’ve done my job!

  21. Why is everyone always so critical about anything this man does? He asks where you stand on this. There’s a perfectly good way to say what you feel without insulting him for asking.

  22. I don’t see this as being particularly unusual. As other commenters have pointed out, booking a tour through a hotel is pretty analagous to booking a shore excursion directly through the cruise line. The “commission” should be thought of more as a service charge for the convenience of not having to do your own research to vet the tour company, usually being able to bill the charges to your room or at least pay by credit card instead of cash, a guarantee that the ship will wait for you, etc. I’ve come to expect that the upcharge will be substantial, and honestly don’t see anything wrong with it as long as the total price is disclosed up front. Sometimes I decide the convenience factor is worth paying $100 for an excursion when I could be paying $50, other times I don’t.

  23. @Psyched

    I assume no tour operator was “robbed” as assumedly the tour operators decide what price they want to offer their tour at and the hotel marks it up however much they want. So it’s not like the hotel is taking 2/3rds of a tour operators profits as some people here are making it sound.

  24. This is exactly the level of commission I’d expect the RC to charge. Sometimes I’m happy to pay these prices, sometimes I’m not. It depends on where I am and how much of the legwork (finding a guide etc.) I can be bothered to do myself.

    But it surprises me that this surprises you! How much do you think the mark up is on a hotel car service? Minibar? Bottle of wine in a RC restaurant? I’d be very surprised if (at any top end hotel) all of those mark-ups weren’t at or around 300%. As I say, I think the mark-ups are fair – after all, people pay them!

  25. Next time just spend 5 minutes on tripadvisor and find a solid off-hotel tour company. Travel 101 is that anything affiliated with a western hotel (airport transfer, restaurants, tours) is always way inflated.

  26. These are the small touches which define good hospitality. It’s not just about smiling, and listening. It’s also about not nickel & diming. Yes, a minibar is expensive, but that’s a hotel owned service. Marking up on a guide is just cheap.

  27. @Barry

    Why don’t you start a blog on how exciting and unsheltered your life is?! I’m sure we’d all love to read the life of an old, tired man who hates his job & wife.

    Least travelled? The guy has probably seen/experienced more things in his first 20+ years than you have in your entire life!

    There is literally NOTHING wrong with booking tours through hotels, especially reputable brands such as the Ritz. He’s travelling to a part of the world that he’s unfamiliar with, and with LIMITED time he’s going to want to make the most out of it. Why would you risk the hassle/frustration/time of taking public transit and/or hailing a cab when you have LIMITED time.

    He’s there to provide US with airline/hotel reviews, not to please Barry on how ‘properly’ experience Kazakstan, as Im sure you in all ways have.

    Cheers

  28. Even if I’m in a city for several days, I still much prefer walking with a knowledgeable guide (usually as part of a group tour). I find the guide adds a huge amount to the experience I can’t get on my own or from a tour book.

    Also, when I was in Rome, there were no tickets available for Borghese Palace directly from their Web site. I was happy to pay Viator a mark-up to gain access to this must-see tourist site.

  29. I give Kudos to Ben for being willing to share that even though he clearly is an expert in many things, there are some areas that he may need to get more information and to reach out for that information. An informed traveler in the end is most likely to be a happy traveler and that is a big reason why I follow Ben’s blog.

    That said, *Extremely* high mark ups on outside tours seems to be a hallmark of all western hotels I’ve stayed at in China and in some other places in Asia as well.

    Once educated, I encourage Ben to expand the service he performs for his bloggers and point out not just how to get to and stay in places all over the world for the least amount of cash, but also the most cost effective ways to enjoy the good life while you are there. It isn’t all about the hotel or the flight in the end….. or am I the only one going to these places to spend most of my time outside of the plane, airport lounges and hotels?

    -cheers and best wishes to all

  30. I’m having trouble believing the hotel doubled or tripled the tour cost. Sometimes I think the tour guides exaggerate what they make (lowering their income) so you’ll feel sorry for them and tip way more.

  31. Wow! Well, I appear to be the only one, but I just learned a very, very valuable lesson! I was brought up (staying in very nice hotels) that the concierge was a service you had paid for already. For anything beyond directions to the drug store or a copy of the map, I always tip, but never, ever, did I think the concierge was padding the cost of the ticket. I figured there were a fair number of kick-backs from the recommended restaurant or club, but . . . ?!
    I’ve always researched and booked my own tours and shows, but now I have a very different–and less kind–view of concierges.
    (Interestingly, just yesterday the salzberg sheraton concierge was telling me she could have booked the same tour for me that I’d booked myself. I was thinking that the 5 euro tip would probably have been worth the saved time and aggravation–slow hotel internet, voucher wouldn’t print, etc. Now I realize I probably dodged a bullet. That tour could have cost 2x as much!)

  32. I never book with the hotel (except if i need a very special visit for a very special event with Mrs Lovetospendit) but i prefer to use getyourguide.com (discovered with emirates and really love it, tons of activities, everywhere).

    Only exception is the new “product” proposed by Conrad (stay inspired / 1-3-5) : really love it and never had bad surprises with it.

  33. @James K. I have three theories about why so many are so critical:

    1) Some of the gay folks are just pissed that Lucky seems happy with Ford and the knives come out especially if Ford posts or Lucky is traveling with Ford.
    2) Some of the straight folks don’t approve of his life choices, as if they’re choices.
    3) Some are just jealous that he gets to travel like he does.

    Occasionally, Lucky makes a mistake, says something clueless or is naive. So what! It’s a blog I read largely for entertainment (though it did save me thousands of dollars on business class flights to Europe this summer on the BA deal).

    Keep doing what you’re doing Lucky.

  34. This is common with all services offered by hotels. Similarly if you visit a hotel spa, the therapist gets maybe 20-25% of the price you pay (though in this case they are offering space and not just marking up a service).

    Mostly I’m amazed that you were not aware of this kind of hotel markup!

    For fun, get a price sheet for holding a conference at a hotel. $50 carafes of Tropicana OJ, etc.

  35. Jesus, where did all the hate come from on this? Lucky asked for opinions and all of a sudden he becomes a target for abuse?!

    I think a certain mark up would always be expected but in this case a commission of 200% indicates something somewhere is broken.

    When possible I will always take the time to look up touts separately to a hotel but have also in the past booked direct with hotels, I know there is an additional charger but would never have expected it to be so high.

    Hopefully this situation is at the high end of the commissions rather than being standard.

  36. I think commissions should be pointed out. I have no problem with people making an honest profit… but often it’s well beyond honest.

    I’d also prefer to give as much $ to the person actually providing the service rather than padding the pockets of people who aren’t. I love finding local guides through word-of-mouth with friends/business associates, even FT.

  37. Add me to those defending @Lucky. I’m disappointed in the many nasty comments that appear.

    Unfortunately many hotels charge outrageous sums for their extra services. For tours, you’re paying for the added convenience, security and (hopefully) stable, consistent, highly-valued offering.
    On the other hand, paying $14US to have a shirt laundered in Prague, or 2X the going rate for “town cars” because there is an exclusive contract for taxi service pickup, is very under-handed (H!lton, are you listening?)

  38. I used a local tour company when I visited Kazakhstan and its surrounding countries last year. In general, I think it is cheaper to organize your own tours in advance if possible when you visit the countries to ensure that you are getting the best price. But you are right, hotels can charge a slight markup but not too much for organizing tours. When I went to Japan last year, the concierge at the hotel helped me and my sister booked a day tour at the last minute and there were no additional charges except for the actual cost of the tour. I could have booked it online but it was more convenient for the concierge to book and confirm the tour for us.

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