More
Considerations When Buying Hotel Rooms Through Priceline
Understand the hidden extra costs of a
Priceline booking
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Do Priceline guests get the worst hotel rooms?
Maybe - and maybe not. It is as much up to you and how
polite you are.
Part 4 of a series on How
to book hotels at the lowest price on Priceline - please
also visit
1.
An introduction to Priceline
2. How much to bid
3. How to rebid in less than 24 hrs
4. The true cost of a Priceline bid
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Hotels have a love/hate
relationship with Priceline and us as their Priceline guests.
They love our business, but
hate the low rates they get from us. Most hotels however
see their glass as half full rather than half empty, and if
you're a polite positive guest, you'll get treatment as good as
their full paying guests.
Note also that Priceline adds
some obscured fees to the base rate you offer to buy a hotel
room at - be careful you don't inadvertently end up paying more
for a hotel than you might from another source.
Calculating the True Cost of
Your Bid
Here's a nasty trick
Priceline chooses to play on us. After you've made a bid
they then add what they refer to as 'taxes and fees' to
your bid amount. So your (eg) $75 bid might end up costing you
close on $100.
We all know that a hotel
room rate has various state, county and city taxes and
surcharges added to it, so on the face
of it, it seems fair that Priceline does the same thing.
But - and here's the nasty trick - the amount of taxes
and fees Priceline adds to the bid is much greater than the
taxes and fees you'd pay if booking directly with the hotel.
In other words, Priceline's
taxes and fees include an obscured extra profit component that goes to
Priceline (in addition to the profit they make in the difference
between the rate you pay them and the rate they pay the hotel
for the room in the first place). This means that paying Priceline $75 (plus its
taxes and fees) is not the same as paying the hotel directly $75
plus the true taxes and fees the hotel charges.
The extra charges from
Priceline seem to combine both a flat fee add-on plus also a
small
extra percentage amount too.
Doing a careful analysis
shows that, for my Vancouver bookings, Priceline is charging
both a fixed fee per booking of about $7 plus also a percentage
fee per booking of just over 17%. This compares to the
actual percentage for taxes that is charged by Vancouver hotels
of 16.5%.
So it seems that in general,
there is an additional hidden fee of about $7 plus maybe another
percent or so that gets blended into the Priceline price.
In other words, if you are
booking for a one night hotel stay in Priceline, then you need
to realize that your 'bid price' - for example, $75 - needs to
have at least an extra $7 added to it to fairly compare 'apples
with apples' as between the Priceline price and the hotel price,
due to Priceline hiding some extra profit/costs into what it
terms 'taxes and fees'.
Of course, if you are making
a two night booking, this fixed $7 fee becomes only $3.50/night
extra, and so on for longer stays.
The Other Side of the Story -
Overpaying through Priceline
it is important to
understand there is no guarantee you will get a below market
rate for your hotel stay when bidding through Priceline.
Quite the opposite. There is a danger you might end up
paying over the going rates for your stay.
This almost happened to me
in November 2010. I was trying to book a four night hotel
stay in Hong Kong, and started bidding at a rate of $85/night.
I edged my bid price up in $5 increments all the way to $140, at
which point I stopped, with Priceline still not accepting my
bid.
I was able to book a hotel
directly for $134/night. I have no idea how much I might
have ended up paying through Priceline, but clearly in this
case, if I had continued raising my bidding up and up, I would
have eventually ended up paying significantly more then I paid
by making a fully informed selection through Expedia.
The Other Side of the Story -
How Hotels View Priceline
Hotels are in much the same
situation as airlines - they have a perishable product with low
variable costs but high fixed costs. They get increasingly
keen to sell room nights the closer it gets to the actual
check-in date, but they have to be very protective of their
published and private rates.
Even though we all know that
the person seated next to us on a plane might have paid half as
much (or twice as much) as we did, and even though we sort of
have come to accept that situation, there is not the same degree of
acceptance with hotel rates, and guests are more likely to get
upset if they discover they paid twice the rate for an
identical room as the person in the room next to them.
So, hotels have this
terrible conflict. How to bring in more business, without
destroying their ability to sell their rooms for top dollar to
people who are willing to pay top dollar?
This is the 'secret sauce'
that Priceline brings to hoteliers. Priceline gives a
hotel a defensible strategy for remaindering off their unsold
rooms. In theory, it never becomes public knowledge if a
hotel is selling rooms via Priceline or not, and - even if it
does become public knowledge - there's no clear understanding of
the rates at which the hotel is selling the rooms for, or which
nights it is making rooms available.
Priceline has done the best
it can to give the hotels excuses to use with their other
guests, and with their corporate accounts. If a guest or
corporate account says something like 'You promised us your best
rate, and we give you 100 (or 1000 or even 10,000) room nights a
year so we deserve your very best rate, but now we discover that
you are selling rooms through Priceline for 30% less than our
special contract rate' the hotel can answer several different
ways.
It can point out that the
Priceline rates are very limited in availability - some nights
they are there, and some nights they are not. It can point
out that sometimes the Priceline rates are indeed below the
contract rate, but it can also suggest that sometimes the rate
might be the same or higher.
The hotel can also remind
their corporate account that the Priceline rates are 'no
changes, no refunds' whereas corporate rates probably allow for
free changes or cancels at any time - something very important
to corporate travelers.
The hotel can point out that
it also offers free upgrades on its contract rates, but
Priceline rates get the lowest room category with no courtesy
upgrades. It can add that the Priceline rates don't get
frequent guest points, whereas the contract rates probably do.
Maybe the corporate rate guest also gets a discount on internet
access or some other benefit, whereas the Priceline guest again
does not.
And so on and so on.
Any hotel worth its salt can easily talk itself out of such a
discussion.
But, even so, some hotels
are terrified of working with Priceline. Here's a comment
from one such hotelier :
I
never used it as it is for bottom feeders. The guests
are dirt bags. Your steady accounts--corporate, high
end travel agents, tour operators, OTA's and groups will
find out that you are using it and will get pissed off, if
you don't give the cheap rates to them too. We tested
it in [a major city] and got caught by a few corporate
accounts and steady travel agents.
Bottom feeding dirt bags?
So now you truly know how some hotels and hoteliers feel
about guests who choose to pay the least possible for their
rooms. If it is any consolation, such hoteliers are
usually much too snooty to 'dirty their hands' with Priceline;
and those hotels who do work with Priceline generally see their
glass as half full rather than half empty. They appreciate
your business, even if the rate is way below normal.
I've often discussed the
fact that I got my hotel room for a bargain rate through
Priceline when checking in to a hotel, and the reception staff
have always been very gracious about it. After all, it was
the hotel's own free choice to offer their rooms through
Priceline - they wanted to sell them at the rate I paid (and -
who knows - perhaps even for less) or else they'd not have done
so.
A suggestion, though - be
courteous to the check-in clerk. The chances are they'll
notice that you have a Priceline booking, and you don't want to
be perceived as the bottom feeding dirt bag that the hotel
manager above so stridently describes us. If you're rude,
you'll probably find yourself given one of the hotel's least
desirable rooms. But if you're polite and courteous, you
have more of a chance of getting the same standard of room that
'normal' guests receive - indeed, I've been upgraded, even to
suites, just by being polite, positive and friendly.
Hotels can Profit Many
Different Ways from Your Stay
A hotel can
make a profit even on a very low room rate. Depending on
the standard of hotel, it probably costs them about $25 - 40 per
night to have someone stay in a room. If they can sell a
room that would otherwise be empty for anything above that,
they're making a small profit, and they're keeping their staff
employed and the lights on. They're also keeping you away
from their competitors.
Plus - don't forget about
the other ways they make money from you. How much did you
pay for parking? That can be close to $30/nigh and
sometimes much more. And
internet access? That might run you another $15/night (and
again sometimes much more).
If you eat or drink in the hotel, you're running up the
hotel's profit from your stay still further. And if you
use the phone in the room to make a phone call, or if you watch
a pay movie, you're again pressing profit into the hotel's
hands.
Hotels can
make money from you even if they barely break even on the basic
room cost.
Summary - The Best Way of Using
Priceline
If you are needing hotel
accommodation and can accept making a booking with full payment
in advance and no cancel/change provisions, and if the thought
of not knowing exactly which hotel you'll be staying at, or
where other than the general area, are also acceptable, you
should use Priceline as part of your hotel booking strategy.
First go to the two websites
with details of successful bids - BetterBidding.com - you can
directly access their calendar of successful bids
here, and
BiddingForTravel.com to see if you can find any information
on what price winning bids are being accepted for hotel stays at
your destination at present, and also confirm to yourself that
the hotels being offered are acceptable to you.
If all looks good, go to
Priceline and make a bid, starting with a bid somewhat below the
current level of winning bid, then use our four strategies for
multiple bidding and allow the bid to increase as you rebid if
necessary.
If you can't get a bid
accepted, consider using
Hotwire if
they have good deals, or a regular hotel booking service, and
booking an acceptable hotel instead.
If at first you don't succeed
- keep trying
Now - here's an important
extension of your strategy. Assuming your booking on any
other booking service can be canceled without penalty, continue
to try to get a bid accepted on Priceline. Remember that
hotels open up and close off their inventory on what seems to us
to be a semi-random basis. Just because there were no
rooms available at rock bottom prices yesterday does not mean
that there might not be rooms available today.
Lastly - if/when you do get
a winning Priceline bid, be sure to remember to cancel any other
hotel bookings you may have also made, and to share the details
of your success on the two websites mentioned above.
Read more in the rest of this
series
This is part 4 of a series on
How
to book hotels at the lowest price on Priceline - please
also visit
1.
An introduction to Priceline
2. How much to bid
3. How to rebid in less than 24 hrs
4. The true cost of a Priceline bid
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Originally published
14 Aug 2009, last update
30 May 2021
You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.
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