Originally Posted by
coolwulf
No. The major revenue PL got is not the difference you're talking about. The major revenue is the difference between the minimum bid and what PL give to hotels.
What we did is only to tell you where the minimum bid is. The major revenue PL got is not affected. The difference between customer's actual bid and the minimum bidding price (or you can call it overbidding) is the extra money PL got out of their major revenue.
Do these statements contradict each other? Can you clarify this?
I believe the statement from
B1 is spot on correct. Priceline hopes that you bid higher than the minimum "offer" (the prices that hotels load into the system) so that this overbid goes right into PL's pockets in addition to its fee. The difference between the remittance from Priceline to the hotel (which covers room and tax) and what you pay to Priceline can be as much as 25% or more. Next time, check your folio on the in-room entertainment system and you may see the amount that PL remits to the hotel, compare it to your bid including taxes and fees and you might be surprised as to how much PL makes on a reservation. It sure beats the good old days when agents made 10% on a reservation.
I have always contended that Priceline functions much like a market maker does on behalf of buyers and sellers in the stock market, with the exception that PL does not own any inventory, because just like fruit, room inventory has a shelf life before it goes rotten. Priceline accepts room inventory from hotels at various price points; these are offers. Customers submit bids for this inventory, Priceline matches the bids to the offers and a successful trade is made as long as the bid is higher than the offer and collects a fee plus the overbid for making a market.