Online travel agencies slash service fees

— -- In the latest round of an escalating battle to bolster sagging travel sales, online agencies are cutting the service fees their customers pay for hotel stays — and Orbitz becomes the first major booking site to show the total price of a night's stay upfront.

Expedia's unannounced fee cuts, which analysts noted in spot checks of key markets, follow this week's pledge by Orbitz that it is trimming fees on bookings made by July 15. Travelocity's Noreen Henry, meanwhile, says her company is "consistently monitoring hotel pricing. There are going to be places where we are lower, some where we match, and some where we don't."

As of this week, Orbitz also shows the final price for a room — base rate, plus combined taxes and fees — on the first screen of search results, rather than later in the booking. Though many travel websites display a "fully loaded" rate for airfares and cars, Orbitz is the only agency to do so for hotels.

But whether the changes will translate to cheaper hotel rates — and put more heads in beds — remains a question.

Under the common "merchant model" of hotel pricing, online agencies negotiate a low net rate with hotels and mark up the rate they display to consumers by 20% or more. That retail price is generally on par with the hotel's own site, but agencies keep the difference between the net and retail rate — along with other, unspecified fees that are displayed together with taxes in the final price consumers pay.

Orbitz's new "total price" policy may save travelers time in figuring the actual cost of a stay, but "it's still wild and wooly out there. There's a lot of volatility in rates and inventory, particularly with independent hotels," says Tom Botts, partner at the research firm Hudson Crossing.

Earlier this month, Expedia, Orbitz and Travelocity waived airline booking fees — about $7 per transaction — on tickets bought through May 31.