What I mean is, how can hotels.com offer hotel prices that are cheaper than available through the hotel itself? I called a hotel directly and asked if they could match their own rate posted on hotels.com. The person at the other end said they couldn’t, and offered a reason that had something to do with packages and so forth that I didn’t really understand. Help?
I can provide “some” insight. I have used hotels.com on several occasions.
For instance, on a gig in Washington, DC, I checked the Marriott Courtyard next to the International Spy Museum, since it was very close to the US Mint building where I worked. On the Marriott web site, they usually had NO availability. Going to the hotels.com website, I could get a room.
I asked the guy at the front desk about this once, and his reply was that he thought that hotels.com (and a few others as well) typically booked “blocks” (his words) of rooms in high-demand areas and then re-sold them. This very definitely fit my experience.
So, FWIW, I don’t have an absolute answer, but I am personally convinced that this is how such works.
Also, FWIW, on these types of deals, I didn’t get a huge price cut on the rooms, as hotels.com specializes in the lower end properties with which they have cut pricing deals. With the higher end properties like Marriott, Hilton, Hyatt, etc., it seems to be an availability advantage, not a price advantage…and their website does tell you that these hotels are not included in their cut-rate pricing. But to reiterate, as to your pricing part of the question, this paragraph, it is done through special deals. For instance, in Baltimore, at a Red Roof, I was charged through hotels,com, payed in advance to them, and got my receipt through them. The Red Roof did NOT provide a receipt, hotels.com did. Also note that my card was charged PRIOR to the stay, not AFTER the stay, which reinforces my take on it.
By the way, unlike some rooms booked through, say, priceline, I always got my frequent stayer points from Marriott when going through hotels.com. But YMMV on this one.
Ex hotel employee here.
Generally what happens is that that the service agrees on rates with the motel owner in advance. The person making the reservation actually pays the service, and at the end of the night, the motel owner runs a special credit card owned by the service through their credit card machine and deducts their share of the room. Generally the service keeps 10%. Usually the hotels lose money on this, but they make up for it in the volume that these services are capable of bringing in.
As for differing rates, hotels change rates hourly depending on a formula based on previous occupancy, current occupancy, and things like the weather and special events. If a motel looks like it is going to fill up for a night, the owner will raise the rates on that room. Since the rates provided by the service are negotiated in advance, these may end up significantly different that the current going rate. In my experience, at least with smaller motels, the rates from online services are usually higher than calling them directly. They usually add the services’s 10% commission to the price of the room.
I don’t understand, lets say the hotel loses $10/room/night, and this service gets them 10 of these money loosing rooms per night, so in my math the hotel is out $100/night. This sounds like the type of service a cow might expect from a bull.
Volume over time. They may lose $10/room tonight, a busy Saturday night. But on Monday-Wednesday of next week, a slow time, they will make money on the price the service pays for the rooms. Remember that the price for hotel rooms varies depending on the day.
Also, most guests spend more than just their room rent. Many eat in the hotel restaurants, have a drink in the hotel bar, and buy the vastly overpriced pop or snacks sold in the hotel. The hotel makes money from all that.
And besides, the hotel’s expenses would have been basically the same if the room had sat empty. By filling it, they are at least bringing in some money toward expenses.
So does hotels.com essentially buy a block of rooms up front for resale, thereby assuming the risk? In other words, the hotel itself makes the money whether or not someone stays in the room? Or is it some more complex arrangement than that?
Not to hijack the thread, but since we have some people with knowledge here already, do hotels set aside “priceline” rooms? I use Priceline almost all the time these days, and I often find myself in rooms near the ice machine or the elevators.
I’ll still trade $100 off the standard rate in a nice hotel for occasional interruption at night.