There was a time when average folks with above average computer comprehension skills were taking hotels to the cleaners. Perhaps the most easily recognizable of these scams was with Priceline and their “name your own price” gig that got people 5 star hotel rooms for pennies on the dollar. While the high-flying, big money guy in the next room who paid full price for his room was footing the bill, the folks upstairs in the penthouse were tromping on his sleep for like thirty bucks. Long gone are those days; regulation, oversight, and furious hotel owners found a way to put a stop to this eventually. Priceline, Expedia, Travelocity, and Orbitz are still quite popular ways to book hotel rooms and even though people think they’re getting a deal with these hotel booking agencies, the truth might not be so clear.
Third Party Hotel Booking Websites: The Deal: I have worked in hotels basically through this whole Priceline debacle. I have primarily run the night audit (11PM – 7AM) overnight shift where I would balance all the transactions of the day. Night audit has come a long way in the years I’ve been doing it in a variety of ways; perhaps no greater change have I seen than in the rates people get from these third party booking websites. Travelocity, Expedia, Orbitz, and Priceline have all done a fine job in convincing folks they need to book through them to get the best deal. These third party sites then make their money by haggling the reservation ahead of time with the hotel, car rental, or airline and they skim their little bit off the top. Because hotels in my experience come from a very old money way of dealing with reservations, bookings, and discounts, there was no template for this in their ledgers. So many times, when they have 70% occupancy, they’d rather have the rooms sold than not. However, they didn’t want to give away these rooms for free; when they started to factor in things like cleaning, maintenance, and other administrative factors, they realized they had to put in a base amount to offer to these third party websites. That’s why when you go onto Priceline today and you “bid” on a hotel, you’ll notice if you go too low, they will come back at you with a “counter-offer.” Priceline knows how little they can get the room for and they would never want to go into a situation in a losing position, so they know what the lowest amount is that they can offer you the room you’re looking for and still make their money.
Third Party Hotel Booking Websites: Homogenization: It seems that much of these ‘great deals’ that people thought they were getting are now not so much. I work in a hotel which is a microcosm for my experience in a variety of markets. The stringency is a lot more in more populous places like New York City and Los Angeles; less so in the suburbs of Connecticut or where I’m working now in Charleston. Still, the writing is on the wall. My experience with the third party hotel booking websites of late has shown a gradual melding to the middle.
I worked in a Holiday Inn in Connecticut when the Priceline regulations took effect. We still had a few stragglers leftover from the old regime, but my boss Kevin used to monitor the reservations like a hawk. He would set the baseline amount he’d give to the third party booking websites and would always undercut them on our website. This was part of his little effort to “show guests that our website is where you can get the best price.” Sure enough, the average rates began to level off.
It’s been the same experience here in Charleston; our hotel booking averages and the third party booking website averages are about on par. You’ll always get one or two which slip through the cracks; somehow or other getting a great rate on one of the third party hotel booking websites. That has usually to do with some offer directly with the website (rewards, frequent traveler, etc) than it is about anything else.
Third Party Hotel Booking Websites: Conclusion: At the end of the day folks might be interested to know that the great deal they feel they’re getting from any of these third party hotel booking websites may not be so great after all.
