Tag: priceline

Using Resort Fees To Identify Opaque Hotels

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One of the biggest scams that hotels are pulling lately is the addition of the “resort fee.” This odious practice started about 5 years ago in Las Vegas. It has now gotten so bad that even trucker motels charge resort fees. These days, it’s very difficult to find a room at all without paying them.

Think a truck stop motel doesn't charge resort fees? Think again.

Think a truck stop motel doesn’t charge resort fees? Think again. The Wild Wild West charges $11.19.

Unfortunately, resort fees are a double-whammy: room prices in Las Vegas have gone up–a lot! It now routinely costs over $300 per night at the better Strip properties over summer weekends. And this is the rate before resort fees, which at some properties add an additional $35.84 per night. When you consider that just a few years ago, you could get an entire room downtown for about the same as a resort fee on the Strip today, you can truly wrap your head around the extent of the madness.

Every summer, I attend DEF CON, which is the world’s largest hacker convention. I’m speaking at an event just beforehand, bSides Las Vegas, where I’m getting a $70 per night convention rate (where the usual $27 nightly resort fee is waived). However, Friday and Saturday nights are $110 per night, and I pretty much won’t ever spend over $100 per night for a hotel room. So this left me looking for a better deal. And at my usual favorite properties, there aren’t any.

The thing is, I needed to be in a particular part of town. You just don’t want to be that far away from DEF CON – the conference is really exhausting and a long commute after each day is more than most folks want to deal with. However, being away from The Strip is nice. My compromise over the last several years has been to stay in the UNLV area. It’s relatively close to The Strip, and I know my way around and (more or less) where everything is. Unfortunately the price of hotels in this area has steadily crept up as other people have discovered my secret, and prices are beginning to approach some areas of The Strip.

However, I have an ace up my sleeve. Although the list prices are up, bookings really aren’t in the part of town where I like to book. Most of the time, it’s not as busy as The Strip. So, while hotels in the area have high list prices, they offer a lot of discounts. Priceline and Hotwire both offer blind booking services where you don’t know the name of the hotel before you book. This can really suck if you pick the wrong property: I have had serious cases of “Hotwire regret” (and the same, although less often, with Priceline). In particular, Hotwire takes artistic license with star levels to the same extent as Expedia–which makes sense, because they’re actually owned by Expedia. And while star levels and resort fees may be a usual source of consumer pain, both of these things make it easier to find out the name of the hotel where you’ll be staying. It’s not 100% reliable but it certainly isn’t bad.

To identify a Priceline or Hotwire hotel, I usually start with BetterBidding. These folks attempt to unmask hotels by the amenities listed. While this method can work, it’s not 100% reliable. Properties in Las Vegas change their amenities around frequently, and the properties participating with Priceline and Hotwire also change frequently. You may find enough information to unmask a property here, but you should combine this data with additional information: the star level (if you’re booking on Hotwire) and the resort fee.

A current listing of hotel resort fees is here, and resort fees are disclosed (albeit in small print) on the booking page of Priceline and Hotwire. They don’t tell you the exact price down to the cent, but you can get a pretty good idea. A resort fee of “about $27” in the “East Of Strip – UNLV” area probably means that you’re looking at the Tuscany. Similarly, if no resort fee is listed, you have an even better idea given the shrinking number of properties not charging a resort fee.

Looking for my dates, I found a $74 per night rate listed on Hotwire in the UNLV area for a 2 1/2 star property including breakfast, parking, WiFi, and a free 24 hour shuttle to The Strip. Best of all, there was no resort fee. However, the amenities and star levels didn’t actually match up with anything listed on BetterBidding. However, in checking the area and the properties with no resort fee whatsoever and offering free breakfast that could reasonably be considered a 2 1/2 star, I thought there was a pretty good chance that I would land at either the Baymont Inn and Suites or the La Quinta.

Another fun trick with Hotwire is that there are often coupons you can find online that apply to hotels. I found one on RetailMeNot for $25 off a booking of $150 or more. I was able to offset most of the taxes and fees with the coupon (which worked, although only if you followed the instructions and booked using the Hotwire mobile app). Adding to the problem of fake low headline room rates in Las Vegas, booking sites add on taxes and booking fees at the end and these can jack up the actual price you pay by $25 or more. In this case, I ended up paying about $154 for 2 nights. And I got the LaQuinta, which is very close to Paris and Bally’s, so I’m happy with the result.

Did I really save the 54% Hotwire claimed? Yes, versus the highest rack rate the hotel lists. However, the actual price if you booked directly with the hotel is $99 per night, plus 12% tax. Nevertheless, I saved about $35 per night. That’s not a bad result, and I ended up in a property I’m happy with at a price that–while more than I like to spend–is just about the best weekend deal you can get for a decent room these days in Las Vegas.

 

How Much Did Priceline Pay For That Room You Bid?

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Last week, I was in the Bay Area on some business travel. In my real life, I’m the founder of a tech startup. We’re not yet funded, so my travel budget is usually somewhere in between sleeping in my car and tent camping. I figured I could probably couch surf on my last trip, but that didn’t end up working out for most of the nights. I did manage to couch surf for two nights, but I also tent camped for a night and ended up in hotels, booked through Priceline, for two nights. For my Priceline room nights, the actual amount that Priceline paid was unintentionally leaked to me. This is normally very closely held information so it’s nice to get a rare inside look at the data.

picture of tent camping

Why not camp out to save money? China Camp State Park, California

So, a few words about Priceline, just so you know what I’m talking about and why this is special. Priceline sells hotel rooms through a number of channels. You can make a traditional reservation at the normal, published rate. Priceline receives a commission for handling the reservation just like any other travel agency. They also offer “express deals,” which allow you to choose a hotel by price, date, zone, and star level, with the name of the hotel revealed after you select a specific one. This works pretty much the same way as Hotwire, another popular “opaque travel” site. The best deals in the hotel business, however, are through Priceline’s “name your own price” offers. These work pretty much the same way as “express deals,” but you bid for a room and hotels within the zone can choose to accept your offer or not. In all cases, the amount that you actually pay bears little resemblance to what was either bid or advertised. Taxes and fees are lumped together and added on at the very end (just before you pay), which can inflate your bill by 20% or more. It’s a shady tactic, but just about everyone does this for hotel rooms.

When you use the “name your own price” method, I found out that the actual amount being “bid” to the hotel isn’t the same as you bid on Priceline. It’s actually a lower price. I was able to obtain data proving this in two cases (although it was provided to me inadvertently). For two different Bay Area rooms in separate properties on separate dates, Priceline pocketed about $10 per room night and refused bids that would have resulted in  a lower profit. I still saved a lot, but less than I expected.

For the first Priceline room night I booked, my winning bid was $60. The actual price I was charged, after my bill was larded up with taxes and fees, was $76.21. However, the hotel made an error and revealed the price that they billed Priceline. So, I was able to see that Priceline actually paid $65.88 for the room. Their profit on this room was $10.33. It’s worth pointing out that this particular hotel was selling its cheapest rooms for $129 per night plus tax, so the savings were still substantial. However, the hotel was nearly empty and really needed to sell the room. Given how my bidding was structured, Priceline could have sold me the room at a $50 and $55 bid. They held out until my bid was $60, guaranteeing themselves a minimum profit. Priceline thus demonstrated that it would have been willing to let last-minute room inventory spoil rather than selling it at a reduced profit.

For the second Priceline room night I booked, the results were nearly identical. I ended up with a $55 winning bid, which was unscrupulously inflated to a total of $69.64. The amount that Priceline was actually billed by the hotel, in data inadvertently leaked to me, was $61.56. So, in this case, Priceline’s profit was $8.08, and I bid for the same room–in the same zone–at $50 which would have turned a $3.08 gross profit.

So, how much is the minimum gross profit Priceline will accept for a name-your-own-price room night? At least based on my experience, it’s more than $5.33 and probably a little less than $8.08. For a single-night booking, this is actually a pretty slim margin. Priceline, after all, has to pay all of the costs of booking the room and processing your credit card. Still, it’s a little higher than I expected, and finding this data has encouraged me not to bid in even $5 increments. If I think I’m close to a winning bid, I’ll more likely increment my bids by $2 or $3 rather than $5.

Part of the value proposition to hoteliers in listing with Priceline is that it’s a good way to liquidate last-minute unsold inventory, albeit at a steep discount. Priceline, however, has demonstrated a willingness to allow inventory to spoil rather than to sell it at an (in its view) unacceptably low margin. It’d be interesting to know whether Priceline’s contracts obligate it to accept break-even bids in order to help its partners unload stale room inventory, and how much this actually is (bearing in mind Priceline’s operating costs). If not, hoteliers would be wise to insist upon break-even or better sales when it comes to any “name-your-own-price” sites.

You might be asking at this point “How was this data leaked?” I’m not going to go into details, because this would probably get the hotels involved in trouble. I’m also hoping that more data will continue to leak so I will have more points of reference in order to formulate better bids. I will say that there were no hacks or shenanigans involved. The information was accidentally leaked to me in both cases, and this probably happens fairly often; the difference with me is that I actually knew what it meant.