Online Travel Booking and Bidding Agencies - Priceline's thoughts on bid results sites.

Someone posted an article on BiddingForTravel where a Wall Street Journal reporter contacted Priceline for their opinion on Sites like BiddingForTravel. Priceline actually likes those type of sites and has no problem with the affialiate links.

I am very surprised. I always assumed that the bid results sites were counterproductive to Priceline's opaque business style. I guess I was wrong. Here is a link to the article: http://pub104.ezboard.com/fpricelineandexpediabiddingfrm202.showMessage?topi cID=27.topic

-S

It's interesting, but I think it only makes sense. Priceline does indeed gain from these sites because they generate more interest and volume of bids, and thus more volume of winning bids where they earn money. Now, the travel providers themselves being upset, I'm not quite sure why that is. It depends upon how the relationship with Priceline works. If they're entitled to some of the "excess" money when people bid more than the minimum winning bid, than I suppose it stands to reason they would be dismayed at attempts to minimize overbidding. But it's not like they can expect to stop something like this anyway. The only thing they could hope to do is stop Priceline's supporting of such an endeavor (via the affiliate program), which really wouldn't change anything anyway.

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--Greg

Does priceline make more money off the commision paid by the travel providers, or the $5.95 fee? Based on the positive reation to sites like BFT, and the WSJ article it sounds to me like the $5.95 fee.

[This message has been edited by skofarrell (edited 04-09-2002).]

My limited understanding is an outsider is this, on hotel stays:

Priceline makes the $5.95 fee on each transaction, along with the difference between the price YOU pay and the price THEY pay the hotel. In addition, Priceline gets an aggregate kickback based on total sales (probably if it crosses a certain treshhold for a given hotel or chain). Subtract from that operating costs, including the cost of any bonus money (gone now) and you got your profit, or lack thereof. http://www.flyertalk.com/travel/fttravel_forum/smile.gif

Hotels are probably a little mad because it 'cheapens' their product in a way; for example, if I know I can get the Marriott in XXX for $40, 1/3 of their regular rate, and that hotel comes up almost all/all the time, then that hotel might get at least a few people who were willing to pay regular rate but were willing to play the odds (as disclosed in part by bidding result sites) to get the cheaper rate and same hotel they wanted in the first place.

Disclaimer: Just MY understanding http://www.flyertalk.com/travel/fttravel_forum/smile.gif

I think the above analysis' are right on target An informed Priceline customer almost certainly is willing to use it more often. I've recommended PL to many people over the last several months, with the stipulation that the look through biddingfortravel.com and get an idea of what type of bids their need, what hotels or airlines they will get, etc.
The suppliers are likely upset because as pitflyer pointed out, why would you pay 3x the PL rate if the odds are very good you'll get the hotel you want?
I did a PL bid for my parents for Orlando in March, and the overwhelming majority of recent winning bids were for the Wyndham Orlando around $30 night. I bid $30 for them and sure enough, I got the Wnydham. No way would I have know that without the BFT website.

I'm not really sure what travel providers will do. On the one hand they probably feel as if their existing rate structure is being cannilbalized (my $30 Wnydham bid was 1/3 of their $89 intetnet rate), and therefore they should cutback on rooms offered to PL.
On the other hand, a room filled is some money (and better yet money not going to a competitor), and there's no way to know that if they didn't get the room thru PL, they would have ended up paying the going rate anyway.
The suppliers original contract prohibited PL from revealing the winning bids, but they probably didn't consider word of mouth (ie. a website) being able to do it).

Jeff

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by skofarrell:
Does priceline make more money off the commision paid by the travel providers, or the $5.95 fee? Based on the positive reation to sites like BFT, and the WSJ article it sounds to me like the $5.95 fee.

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Priceline makes most of their money off the difference between the cost and what they sell the service for. I would assume that most people don't do any research other then finding what a hotel or an air ticket costs and cutting it back 10 or 20 percent and bidding, and everybody knows that bid is way too high. Priceline is happy, they make money, the person is happy, they save money (though not as much as they could have), etc.

I would estimate the number of people doing any real research on it is a very small percentage of the number who use Priceline.

Most people only care about saving some money, not getting it down to the last penny, they can't be bothered. If they get an $100 room for $70 and only pay a $6 fee, they feel they are still $24 ahead of the hotel. They don't know, or care, they probably could have gotten it for $40 or whatever.



[This message has been edited by cordelli (edited 04-09-2002).]

The hotels (and Priceline) also have to consider elasticity of demand -- in other words, some consumers simply won't pay to stay in a hotel for certain occasions unless they can get it at a price below some (very low) threshold. These are not customers who would have paid the full rate anyway, but customers who would never have bought the room without Priceline.

In my case, there are certain situations where it is convenient but not absolutely necessary for me to stay in a hotel; and for those situations, I can accept the few inconveniences of using Priceline (including "opacity," non-refundability, and the possibility of not even making a successful bid) in exchange for a super-duper-low price (in my few experiences, about one-third to one-fourth of the absolutely cheapest rate otherwise available on the web -- in other words, discounts of 65 to 75%).

I suspect that as time goes on, the rates available through Priceline may gradually creep up, while remaining good bargains. I gather to some extent this has already happened (fewer bonuses now, for example).

Kathy

[This message has been edited by KathyWdrf (edited 04-09-2002).]

Priceline came up with this idea of "opaque" bidding to entice travel providers to provide their product at discounts without taking away from the business they'd get anyway. I've seen figures quotes as high as 99% of Priceline customers are incremental (they would not be staying at your hotel if it weren't for Priceline).

The problem is these boards are taking away the "opaque" nature of Priceline. Priceline doesn't mind, they still get their cut, it's the providers who want the model to be "opaque" (BTW, Hotwire has much the same problem, possibly even more so with hotels since you can relate certain prices to certain hotels in some cases).

Also, the hotels in fact do have the opportunity to make more if folks bid higher. A hotel can load up to three rates for any given date with Priceline. Priceline is obligated to book a winning bidder into the highest rate they can. So, for instance, a hotel can have rates of $40, $60, and $80 for April 15 loaded in Priceline. If someone bids $45, the hotel gets $40. If someone bids $85 though, the hotel gets $80, not $40.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by KathyWdrf:
...I suspect that as time goes on, the rates available through Priceline may gradually creep up, while remaining good bargains. I gather to some extent this has already happened (fewer bonuses now, for example).

Kathy

[This message has been edited by KathyWdrf (edited 04-09-2002).]</font>

One unfortunate way for hotels to compensate for low Priceline rates is to impose surcharges (resort, energy, I'm sure security will come soon). The Wnydham in my previous post still gets my winning bid at $30/nt, but now I'll also have to pay $5 a night or so as a resort fee (I think they do actually have such a fee, I haven't seen the final bill from my father who the rental was for).

I also agree with the previous comment that the number of 'educated' PL customers who know about biddingfortravel.com and other tricks about it are VERY small. You have to remember FT is a VERY educated community. We're talking about mileage runs and $100 or so transatlantic mis-fared flights, while probably most of the air travellers don't even have or use FF miles.

Jeff

At least in my own experience, a lot of hotels these days are changing their PL rates to be a little bit higher (and it seems even more so because of the demise of bonus money) and are making Internet-only, fully-prepaid non-refundable rates available on their website which are only marginally more (10-25%) than the Priceline rates. This has at least been the case at many Wyndhams and Sheraton's I've seen.

Deals are still to be had in a lot of the larger cities with stiff competition, but I'm seeing less and less times where you can get 75% off... like the days when you could get a $40 hotel for $1 .. or 97% off!

Greg,

Apparently you were right that Priceline's suppliers didn't like the fact the Priceline supports BFT type sites.

I just noticed that Sheryl posted yesterday that BFT is no longer a member of Priceline's affialiate program. Sheryl has also *implied* that she will not be moderating BFT as strictly as she has in the past.

For those of us who were uncomfortable with the potential conflict-of-interest or the style of administration at BFT, this is great news. If the moderation style really does change, I may even consider posting there again :-)

Here is Sheryl's comment: http://pub109.ezboard.com/fpricelineandexpediabiddingadministratorannounceme nts.showMessage?topicID=208.topic

Yep, it seems that it must have struck a nerve with the providers. Priceline itself from the WSJ article obviously didn't have a problem with it, but someone must have threatened to stop supplying them if they didn't sever their ties. I wonder if any other travel-related affiliates got axed? Priceline has an "affiliate" program the same way Amazon does. Anyone with a web site can sign up, put up a link and make a cut of any click-through purchases. The affiliate link is still on Priceline.com, so I assume the trouble is only with BFT and potentially other travel sites with such discussion if there were any.


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--Greg

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by CrazyOne:
I wonder if any other travel-related affiliates got axed?

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While I can't speak for all of them, I know that at least some of them are still active.

My site www.pricelinedeals.com (http://www.pricelinedeals.com) , mentioned in the article is still up and better than ever. Got the nasty email from Priceline and had to remove their banners.

I'd like to thank Sheryl for screwing things up!

Can't do it there. They still delete all my posts within seconds of posting them.

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by aunixguru:
My site ... is still up and better than ever. Got the nasty email from Priceline and had to remove their banners.

I'd like to thank Sheryl for screwing things up!

Can't do it there. They still delete all my posts within seconds of posting them.</font>

It's easy to set up a so-called "better-than-ever" board when all the information posted on it is clearly and illegally lifted form ezboard.

nm

[This message has been edited by ilander (edited 04-12-2002).]

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by aunixguru:
My site www.pricelinedeals.com (http://www.pricelinedeals.com) , mentioned in the article is still up and better than ever. Got the nasty email from Priceline and had to remove their banners.

I'd like to thank Sheryl for screwing things up!

Can't do it there. They still delete all my posts within seconds of posting them.</font>

Your site is useless. http://www.flyertalk.com/travel/fttravel_forum/thumbsdown.gif

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Arrzee:
It's easy to set up a so-called "better-than-ever" board when all the information posted on it is clearly and illegally lifted form ezboard.

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Pot

Kettle

Black

<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Arrzee:
It's easy to set up a so-called "better-than-ever" board when all the information posted on it is clearly and illegally lifted form ezboard.

</font>

Really! Who is this guy who has not only lifted graphics straight from Sheryl's site, but clearly lifted info directly from her site. I can see the info from my own posting on BFT on this rip-off site.

Can we get someone to delete this self-serving commercial post??

I don't think that the post re. this site is only "self serving". I find it helpful and interesting.Sheryl has recommended her post on FT many times.Although it benefited her,it has been a great aid for many others.This new forum,however,is clearly using data from her site.The legality and ethics of this is questionable. While the style of BFT's may bug me at times,I can't support this new one.