If you’ve spent a day in hotel school, then the terms “RevPar,” “ADR,” and “% Occupancy” all sound familiar to you. For those of you who don’t know, the terms mentioned are relevant to the practice of Revenue Management.
Revenue Management is a strategy used by providers of perishable products in tourism to maximize revenues. Effective revenue management requires accurate forecasting of demand and a keen knowledge of current costs published by the competition. When looking to buy a hotel room, Revenue Management is on your side through two vendors.
Hotwire, Inc. (www.hotwire.com)
Priceline.com, Inc. (www.priceline.com)
Hotwire and Priceline are unlike all other travel booking sites. Although both sites offer generic hotel booking capabilities that disclose the hotel brand, they offer something far more unique... the “brand blind” booking capability.
When participating hotels forecast empty rooms on a given date, they will allocate those rooms to brand-blind vendors such as Priceline and Hotwire. A brand-name hotel with a solid revenue management department will know almost undoubtably that those rooms WON’T SELL, and otherwise will represent revenue lost forever since a room night is perishable and can be sold just once. The hotel WON’T just drop the prices of its rooms however, because advertising such low rates could potentially bring down the public image of the hotel. If you saw $50/night rooms advertised for a particular 4-star Marriott for example, you might question the quality of the product; hotels know this. I’m here to tell you however that such rates do exist and can be obtained by anyone.
Revenues earned from bookings on Priceline and Hotwire are seen as extra revenue by the hotels as they know they that the rooms really should be empty. The cost MUST cover the housekeeping cost of course, which averages between $10 - $20 per day, per room.
Enter your reservation details into the hotwire system, and you are then presented with various options. The options will display the price, star level, amenities, and general location of the hotel. Remember, they CAN’T display the hotel names in order to protect brand integrity.
There is a secret to hotwire however that a client of The Early Air Way actually pointed out to us... YOU CAN REVEAL THE HOTEL BRAND! Basically, open up hotwire in a second window, and re-sumbit your search as a package “including airfare.” The departure city you select is irrelevant. On this page, you’ll see the names of the hotels. Compare the amenities of the hotels on both pages as well as the star levels and locations. When you have a match of all components, then you will have revealed the brand! Shhh... this is a secret.
Priceline will generally get you rates about 20% less than Hotwire, but 50% to 65% less than ALL conventional booking methods. This is only the “Name Your Own Price” function, by the way.
When you name your own price, a good place to start is the hotwire price for a similar hotel category, but discounted by 20%. Another good tool for deciding on a price is the website www.biddingfortravel.com On Bidding For Travel, members post what prices Priceline accepted for each city and which hotels they were assigned. Most likely, you will get placed at one of the same hotels the members of the website were placed in.
You’re technically only allowed to make one Priceline request in a 24 hour period, but the secret to getting around this is just using a different e-mail address for each request.
We use Priceline all the time, and routinely get the following rates just as a few examples:
Westin Downtown Los Angeles: $75/night
Century Plaza Los Angeles: $120/night
Westin New York Times Square: $125/night
Hilton Disneyworld: $65/night
By comparison, here are the discounted Expedia rates for the above hotels:
Westin Downtown Los Angeles: $249/night
Century Plaza Los Angeles: $279/night
Westin New York Times Square: $649/night
Hilton Disneyworld: $174/night
Many people worry about the quality of hotel they will get with Priceline since they can’t reverse the transaction once its done. The fact is, you are able to select the star level and location. If you MUST chose the exact hotel, then Priceline may not be for you. A good review of www.biddingfortravel.com will give you a good foresight of what to expect, however.
Priceline has rates just as spectacular across the globe. For me, it’s a personal favorite when looking for a 4-star hotel. When looking for a 5-star luxury hotel, I’ll either try the Hotwire trick posted above, or will just book the room directly through the hotel at the standard rate.
Trust me, the methods above are THE best ways for getting the cheapest hotel rates. Forget shopping around, and stick with the method given to us by the science of Revenue Management.
The reason it exists may sound complicated, but its going to get you a 4-star hotel room for $50!
Founder & President
The Early Air Way, LLC