Online Travel Booking and Bidding Agencies - I know how much PL pays the hotel!

The bill under my door this morning showed how much my room cost (via Priceline). Basically I saw how much Priceline was paying the hotel for the room. Kinda interesting - the profit margin was about 15% (plus their "handling" fee). Maybe I overbid? :)

You probably overbid. What hotel was it, and what did you bid?

Sorry, but you overbid.

Priceline will sell you a room at exactly their cost to the hotel (i.e., they will accept an offer in which they make ONLY the handling fee, and not one penny over the cost of the room to them).

Are you guys certain about this? I've been booking on PL for quite some time now and have been maintaining a spreadsheet of my bids. I'm at the point where I'm raising my bid a dollar at a time for my free rebids and have it pretty well mapped out. How can PL make any money if they just sell the room at the rate they get it from the hotel? They have to be marking it up a little (I'm talking about $5 here).

I'm very confident that they will complete the bid for just the service fee. I have on numerous occasions seen hotel folios indicating the PL payment to the hotel, at the exact penny of my bid. I have witnessed this in numerous hotels over several years, and very recently. For example I recently stayed at the SFO Airport Hyatt for a bid of $34, and my receipt on check-out at the Hyatt showed a payment by Priceline to the hotel of exactly $34.

Remember, if you bid $34, you really paid Priceline $34 plus taxes AND FEES. It is the AND FEES part that Priceline is making the money on (plus any amount of overbid)

Here's a good link providing information to hotel managers how the relationship Priceline - hotel works:
http://www.utellportal.com/Marketing/priceline/
I believe it says something about how the pricing works as well...

Very interesting link sveg. Thanks for posting it. My favorite part:


Extend Valued Guest Treatment: You will place the Priceline guest in a room comparable to (or better than) your "best available" room assignment. You will welcome the Priceline guest just as you would welcome any other valued guest. (Remember this is your opportunity to "brand" that guest for a return visit.)

Not every hotel/hotel manager must have seen that part... :rolleyes:

Remember, if you bid $34, you really paid Priceline $34 plus taxes AND FEES. It is the AND FEES part that Priceline is making the money on (plus any amount of overbid)
AND a commission on the rate itself.

Given that I have read several different accounts of how hotels and Priceline work out their respective payments, I tend to think that different hotel chains might have different arrangements. In addition, I know some hotels do not work with Priceline directly, but through an intermediary agency.

Are you guys certain about this? I've been booking on PL for quite some time now and have been maintaining a spreadsheet of my bids. I'm at the point where I'm raising my bid a dollar at a time for my free rebids and have it pretty well mapped out. How can PL make any money if they just sell the room at the rate they get it from the hotel? They have to be marking it up a little (I'm talking about $5 here).

Can you share any of your strategy or bidding data that may make us better bidders? I would like to go beyond the bidding strategies listed on BFT or BB.

Back when you could figure out the hotel's Priceline rate based on the taxes (as the service fee was a flat $5.95 rather than the variable rate it was) I regularly bid exactly what the Priceline rate was. With bonus money, I would often bid $10+ less than the Priceline rate at that hotel, so even with the fee Priceline lost money (but if you add back commission on the rate, they may have come close to breaking even).

I've only used Priceline once in the past year. Too many good deals through other channels that I don't really save enough on Priceline to be worth the loss of perks/flexibility.

Back when you could figure out the hotel's Priceline rate based on the taxes (as the service fee was a flat $5.95 rather than the variable rate it was) I regularly bid exactly what the Priceline rate was. With bonus money, I would often bid $10+ less than the Priceline rate at that hotel, so even with the fee Priceline lost money (but if you add back commission on the rate, they may have come close to breaking even).

I remember the bonus money days. :) Remember the $20 per night AMEX bonus money? At that time Priceline was losing money like mad. I bought a bunch of Priceline stock at ~$2 just befor ethey finished that deal and it went up to $8 within weeks afterwards. My finest stock purchase ever! :D

I knew that bonus money was killing them.

Can you share any of your strategy or bidding data that may make us better bidders? I would like to go beyond the bidding strategies listed on BFT or BB.

Nothing too sophisticated. I've been staying in the same area for the last 4 months so I kinda have things figured out. Basically I keep a spreadsheet with:

0. Number of stars and area
1. Day of the week being bid (M, T, W, R etc...)
2. Days before the date being booked
3. Priceline "suggested price" for the date being booked
4. Hotwire price for the same number of stars for the date being booked
5. Last unsuccesful bid
6. Winning bid (if any) - usually $1 more than #5

Using the historical data I see what has won based upon the prices given to me in #3 and #4. I chop off a couple of dollars and slowly work my way up a dollar at a time using rebids from free areas. Pretty standard approach.

I'm thinking about putting it all into a database since I'll be here for a few more months.

Btw, the price I saw on the invoice ended in .25 - does PL let you bid in increments less than a dollar?

And I bid through travel.ebay.com - I've racked up some serious PayPal $$$.

Here's a good link providing information to hotel managers how the relationship Priceline - hotel works:
http://www.utellportal.com/Marketing/priceline/
I believe it says something about how the pricing works as well...

Great link, thanks!

Interesting:

Load Competitive Priceline Rates: We expect you to load competitive, discounted, non-commissionable Priceline rates into your central reservation system to be sold via the WorldSpan GDS.

The Priceline system looks for the highest available Priceline rate that satisfies the customer offer and a small margin requirement in the search.

For what it's worth... though I believe Priceline would accept a bid at cost, still profitting from the service fee. Why wouldn't they?

Here's a good link providing information to hotel managers how the relationship Priceline - hotel works:
http://www.utellportal.com/Marketing/priceline/

I'd like to add my voice to the burgeoning list of thank yous for posting this very insightful link. ^

I recently checked on a reservation won on priceline.com using the winning brand hotel's website. I was able to view ALL the credit card information, including name/ type of card/ entire account number/ expiration number. Why????

I recently checked on a reservation won on priceline.com using the winning brand hotel's website. I was able to view ALL the credit card information, including name/ type of card/ entire account number/ expiration number. Why????

Do you mean you were able to see the credit card number that Priceline provides to the hotel (which is a one-time use Mastercard number, last I heard)? Or do you mean you were able to see your credit card number?

I'm able to see the Priceline Credit Card #.... I would be worried if I were able to view my credit card number! :D

Are you able to see the entire Priceline credit card number, or just the last four numbers? Are you also able to see prices & tax amounts?

I just looked up one of my Priceline reservations on the hotel's website. Here's what it displays....

Billing Information
Card holder name:
Credit card type: MC
Credit card number: ***********9064
Expiration date: December 2008

This of course if Priceline's credit card info. There are no price or tax amounts displaying.

I'm very confident that they will complete the bid for just the service fee. I have on numerous occasions seen hotel folios indicating the PL payment to the hotel, at the exact penny of my bid. I have witnessed this in numerous hotels over several years, and very recently. For example I recently stayed at the SFO Airport Hyatt for a bid of $34, and my receipt on check-out at the Hyatt showed a payment by Priceline to the hotel of exactly $34.

I do believe that different chains have different policies - I know that Priceline's contracts differ amongst hotel chains (I have a friend who used to work for them) - however for the hotels that have the same pricing (as seen in the example above), one of two things could be happening. The first thing, I believe, is that it is a commissionable rate, most likely at 10% - however, it could be more or less depending on the contract and that PL would make about $3.40 off of that rate + their own fees - taxes would be paid directly to the hotel. The second thing, is that the hotel has estimated Priceline price points & sets their rates at these pricepoints. Priceline pays a rate depending on the bid level. For example, with the 34.00 bid above, it's possible that they paid the hotel 31.60 and the hotel's internal system logs it as a 34.00 rate on the guest reciept (think of it as an invoice similar to the car - you can see the MSRP & you can see what you paid, but you still don't know what the dealership paid).

I do believe that different chains have different policies - I know that Priceline's contracts differ amongst hotel chains (I have a friend who used to work for them)

[snip]
I figured this had to be the case, given the multiplicity of different schemes I have read about.

I just looked up one of my Priceline reservations on the hotel's website. Here's what it displays....

Billing Information
Card holder name:
Credit card type: MC
Credit card number: ***********9064
Expiration date: December 2008 [/B]

This of course if Priceline's credit card info. There are no price or tax amounts displaying.

However, I believe Priceline uses 'disposable' credit card numbers. From the information referred to in my previous post in this thread (the Utell information), it seems like the credit card numbers are unique for every booking.

Merry Christmas!

sveg

The rate at a hotel I regularly book via Priceline has constantly been $83. Yet, I have got it for $73/75/77 - and certainly know I didn't overbid a single dollar. Any ideas/insights why the PL rate fluctuates like this?

LH747FTL, the reason that you have seen different PL rates for the same hotel is likely due to the fact that most hotels can load more than one Priceline rate (plus of course that some hotels do yield the PL rates quite aggressively). For example, hotels in our chain can actually have up to 8 Priceline rates loaded and available on any given date.

But the rate has been listed as $83 every time on the registration form despite my different successful bids. And I bid for 1 night with $1 increments.

But the rate has been listed as $83 every time on the registration form despite my different successful bids. And I bid for 1 night with $1 increments.

The hotels "regular PL" rate maybe $83 and this rate is linked to the rate code used in the hotels management system. The rate would then be manually changed for the posting. The hotel may have a special rate loaded for PL for that night(s)

I'm very confident that they will complete the bid for just the service fee. I have on numerous occasions seen hotel folios indicating the PL payment to the hotel, at the exact penny of my bid. I have witnessed this in numerous hotels over several years, and very recently. For example I recently stayed at the SFO Airport Hyatt for a bid of $34, and my receipt on check-out at the Hyatt showed a payment by Priceline to the hotel of exactly $34.

This has always been my understanding as well. Something strange happened this morning when I was checking my folio at the Sutton Place Newport Beach.

My lowest accepted bid for *4 in Newport/Hunting Beach was $71 + fees/taxes. According to the folio hotel got paid $59 + $5.90 for taxes. Grand total of $64.90.

Wonder why my lower bids at $69 and $70 were not accepted. Any good ideas?

holtju2 - quite possibly that extra amount is the "booking fee" that Priceline charges. (Priceline used to charge a fixed amount for a booking fee and it was displayed on the confirmation screen. They then changed it to just 1 line showing taxes and fees. They did this so they could vary the fee amount without you knowing)

steve100 - The booking fee has been lumped in the taxes and fees since they changed the way it is displayed to make the price that the hotel gets paid more opaque for informed bidder.

I just don't understand that my accepted bid before taxes and fees was $12 more than the price that the hotel got paid.

Excellent Customer Service: Priceline.com provides 24-hour customer service through a toll-free Customer Service Call Center at 800-340-0575. Priceline.com is committed to providing top-flight service to our valued customers and our mutual guests.

At least we have a number, I used to never be able to talk to a person at priceline.

holtju2 - The $12 extra is the priceline 'fee'.

PL gives you the hotel with the highest qualifying rate; hotel price plus a potential margin. All information I've read says PL is rarely adding a margin to the hotel rate and is content to make money on overbids and fees. If you bid too high PL gets their fee PLUS your "overbid".

Holtju2--if another hotel (or even the same hotel) had a PL rate within the $12 range a hotel would have gotten more money. You probably overbid.

Steve100 Holt is talking about the bid price vs what the hotel was paid. Nothing to do with the PL fee.

Holtju2--if another hotel (or even the same hotel) had a PL rate within the $12 range a hotel would have gotten more money. You probably overbid.

Steve100 Holt is talking about the bid price vs what the hotel was paid. Nothing to do with the PL fee.

My bids were $68, $69, and $71. This is the Newport/Huntington Beach zone and my bid was for *4. I was hoping to get either Hyatt Newporter or Huntington Beach Hyatt but ended up with the Sutton Place.

The hotel's Priceline rate was $59 and thus I should have got this hotel in my first bid by overbidding the hotel's Priceline rate by $9.

My bids were $68, $69, and $71. This is the Newport/Huntington Beach zone and my bid was for *4. I was hoping to get either Hyatt Newporter or Huntington Beach Hyatt but ended up with the Sutton Place.

The hotel's Priceline rate was $59 and thus I should have got this hotel in my first bid by overbidding the hotel's Priceline rate by $9.

All of the old information I've ever read indicates that PL will always accept a bid at their cost. I've never read PL requiring a margin or mark up of even $1.

As strange as it sounds is it possible the hotel actually loaded the rate into the system between your second to last and last bid? That's the most logical explanation.

Indeed, I've had availability chance real-time in front of my eyes... unsuccessful bids for 4* in several zones in NYC, a 3* bid of $110 got upgraded to 4* successfully only minutes later. Heh.

Could there be bugs in the database query mechanism?

Just a quick datapoint on what Priceline pays.... I just returned from a weekend stay at the Westin La Paloma resort on a winning bid of $110/night. The hotel screwed up and made Priceline's folio available via Lodgenet. They paid $109/night. I neglected to note the taxes to determine whether Priceline is also profiting from a spread there.