<font face="Verdana, Arial, Helvetica, sans-serif" size="2">Originally posted by Factotum:
It's not that close to a zero-sum game. Sure, the guy who got a $40 room on priceline probably would have paid more if priceline weren't there, but there's no guarantee Marriott would be seeing any of that money. More likely it would have gone to a cheaper alternative like Holiday Inn or Motel 6. In that case the guy may as well have stayed home, as far as Marriott is concerned. Speaking of which... there are plenty of cases where the premise that the customer would be paying for lodging anyway is not valid. priceline targets leisure travelers, whose trips are mostly discretionary. It would be just as easy for Marriott's $40 customer to say, "Hotels at this destination are too expensive. I'm not going."
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There are people who see a bargain price and decide to travel when they otherwise wouldn't. For those sales (and that is at the margin), cheaper rates thru Priceline increase demand.
However, as to each facility that may not be the case. Marriott may think they sold a room for $40 that would've been empty but a lot of the $40 customers might have paid $100 for the same room without Pricleine. Of course Marriott can limit or eliminate Priceline availability as they analyze their yield reports.
I think that as the use of Priceline and Hotwire spreads, it is the high-end facilities that have the most to lose as the premiere product they offer becomes commoditized.
I also agree that you should get the same basic service regardless of how you bought your room, and if Priceline is smart, they'll make sure you do.