[VIDEO] Why I Booked On Priceline

I feel like I need to come clean. Over the weekend, I did something pretty terrible. I’m a little bit nervous to state this publicly, but I booked a room on Priceline.

I really didn’t mean to, it just kind of happened.

One minute, I was trying to make reservations for a wedding that I’m attending next weekend, and the next, I was awash in guilt about what I’d just done. Now, in an effort to atone for my sins, I wanted to share my experience in order to warn hoteliers of the dangers associated in participating in the package and opaque OTA inventory paths.

So how, you ask, could I let down my fellow hoteliers and book through the much-maligned OTA? Well, I guess it was because it was easy and cheap. Kind of like I’m feeling right now.

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Let me run you through the pace of events. It started when I called the hotel to see if there were still rooms available in the wedding block. I knew that it would be a slim chance, as we were inside of the cutoff date, but I figured that perhaps it was worth a shot. Now, when I reached the operator at the end of the line, she told me that there weren’t any rooms remaining in the block, but that she’d be happy to book me a room for two nights at their best available rate of $195.

This felt a bit steep for the Holiday Inn Express in Buffalo, New York, and normally I would have called up an industry connection to see if they could help me out, but since I don’t have any friends in Buffalo, I quickly typed priceline.com in my browser to get a view of everything available in the market over those dates.

And when I arrived, I was shocked. Sitting there at the top of my search results was a Holiday Inn Express with a rate $60 lower than I’d just been quoted. Now, I called the hotel back to see if they could match the $137 rate and was told to go ahead and book on Priceline, as they couldn’t give me the same deal…so I did.

By my calculations, the hotel lost $116 on this transaction alone. I don’t even want to think about how many others went through a similar process, potentially costing the hotel thousands of dollars over a two night period. Not to mention the fact that if I wasn’t such a hotel homer, they might have allowed Priceline to turn me into a loyal customer by showing that I could get a better rate through the online travel agency.

So obviously, this wasn’t a great outcome for the hotel. But what happened here? Over the past few years, Priceline has become much more adept at reducing the opacity of opaque rates and unbundling package rates. Whether it’s modifying their opaque concept to allow customers to book with the intended hotel with a reasonable level of certainty, or extending the definition of ‘package,’ Priceline is doing some shady stuff. Now, let’s take a look at a few ways in which Priceline is out gaming hotels in order to offer the best possible price on their website.

No Longer Opaque

One of the ways in which Priceline is working around their parity agreements in order to show customers a better rate than they would be able to book directly at the hotel is via their express deals concept. Now, Priceline will tell you that this is opaque inventory, and in the past, when they were leveraging the inventory for the ‘name your own price’ feature, it was a little bit more challenging for the consumer to understand which hotel they were going to get. That is no longer the case for reasons I’ll show you here in just one second.

If I click into ‘express deals,’ it will pull up a list for me of a number of different quality levels and neighborhoods. At the top of the list there, I can see that there’s a four star hotel available in downtown Austin for $100– seems like a good deal. Let’s see what else we can find. Wow, five star hotel in downtown Austin. I’m feeling like I want to spend a little bit of money this weekend, so let’s take a look. It’s a five star hotel so I know it’s going to be nice, but I want to understand a little bit better which hotel specifically I’m booking.

In this case, you can see it’s 20% off, it was $207, it’s now $166 per night, and we’re in downtown. So, if I start to search a little bit more finely on the public-facing side, we’ll see if we can figure out exactly which hotel it may be. Downtown Austin, I click on that, gets me down to 58 hotels. I go to five stars, wow, now it’s slimming down to a possibility of four hotels. It could be the Fairmont, Four Seasons, Fairmont Gold Experience, or this five star hotel, counts as one of those express deals. So, really, we’re down to three possible hotels that it could be.

Now, if I go back to the ‘express deals’ tab, I can take a look at the amenities, and I can see we have a business center, a fitness center, pets allowed, and a pool. If I go back into my amenity filter here, pets allowed, business center, swimming pool, and, is there a fitness center as well? And fitness center. Still leaves me with the same number of hotels. Total of three.

However, if we look at this, it was $207, right? Let’s see if we can find something that’s fairly close. In this case, you can see here, we have the Fairmont Austin at $210. Four Seasons is pretty high, and the Gold Experience is pretty high. My guess is on the Fairmont Austin. Now, if we click on this ‘choose’ here, it’ll take us to the booking tab for that particular express deals hotel. And now when I click in to ‘book,’ it’s actually going to say, “Five star hotel, book soon! Someone recently got the Fairmont Austin.” Now, if we go back to the public facing side, was $210, Fairmont Austin, our express deals, was $207, $166, and now this is lining up as the Fairmont Austin.

Now, I’m not going to go ahead and complete this booking, but I’ve done this with other shops in the past, and if I were to click through and book this, I would get the Fairmont Austin. And when you go through this process, express deals inventory is not so opaque, is it?

Redefining “Bundled”

Another way in which Priceline is taking money from the pockets of hoteliers is by loosening up their definition of package inventory and unbundling components that were previously packaged together in order to allow the customer to book a total value rate without understanding the individual price of each component. Now, let’s say that I want to go to San Diego next weekend, and I do a quick market search here.

You can actually see up top that it lists a number of hotels that are offering special discounts thanks to me having booked a rental car with Priceline. Now, the crazy thing about this is that I booked a rental car with Priceline three weeks ago in another destination, and I haven’t booked anything since. And yet, Priceline is still serving up this package inventory for me.

Now, you might say that this is because I’m signed in, but you can see here that I’m not. So they’re either tracking me via cookies or fingerprinting techniques, in their understanding that I booked that rental car a while back and now serving me that unbundled inventory.

So, if you’re currently participating on package inventory, I would request you connect with your market manager today in order to get this practice shut down and determine how you can stop showing lower rated inventory than the guest might be able to find directly on your website.

Wholesale Arbitrage

Now, the final one is a bit of a bonus, as it doesn’t deal directly with priceline.com, but rather, the company behind priceline.com. So, if you look at booking.com, often times what you’ll see is that they are sourcing inventory from other places in addition to just the direct inventory that hotels are supplying them. In most cases, this is coming from wholesalers, it might be Ctrip, Pagoda, et cetera.

And what happens is when you scroll down as a customer, you’ll see this booking basic rate, and it’s a non-refundable rate, and your bed type to be assigned by the property, and then you have $167 value there. This is a rate that’s coming from a wholesaler. Often times there will be, since that wholesaler’s at a fixed rate, there could be anywhere from a $20 to $60 difference between the variable rate that’s being offered through booking and the wholesale rate, so booking will pick up on this, give the customer the better offer, and it puts the hotel at a disadvantage from a parity standpoint.

It used to be that you could leverage developer tools in your browser in order to do a search on a wholesaler ID. Seems to no longer be the case. It looks like they’re passing a partner channel ID that doesn’t actually contain that information. So, if you see this, I would go ahead and just complete a test booking and send that through, figure out which channel it came from, and then approach that wholesaler in order to, one, shut down their onward distribution to booking, but two, also obviously cancel out that reservation. Once you do that, you’ll put your hotel at much more of an advantage in regards to parity.

That about covers it. Please, I’m begging all of you hoteliers out there, don’t give me a chance to book Priceline again. By jumping all over this now, you’ll increase your revenues and enhance your brand, allowing you to ensure that your customer and your hotel receive the greatest benefit the next time that your property is booked.

Closing

Thanks for tuning in to this week’s Mathlete Monday episode.  If you enjoyed it, please take a few seconds to share it with your network.  And as always, if you’re interested in additional episodes, please head over to focalrevenue.com/content.

I’ll catch up with you soon.  In the meantime, good luck outrunning the competition!

 

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