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Should i Bid Early or Close to Arrival Date

40 posts in this topic

This is a very interesting discussion.

I have to say I have no definitive idea. More basically, I wonder how for instance priceline and hotwire "work".

I mean :

1. Do they negociate a bundle of rooms ? Do they have an army of operators calling/harassing/buying from desperate hotels ?

2. Do they only provide a B2C portal, where hotels do individually, and on their sole need, put new deals to offer with a start price ?

3. How are priceline / hotwire incentived ? margin fee on the transaction ? fixed fee + margin ? or fixed fee only ? What happens in the cases of bids : where does the captured premium go ?

I think that getting answers to these questions on how these two sites operate their business model would help (at least myself! smile.gif ) to get a good understanding of how a hotel can use them in the most efficient way to their advantage, ;

And then, based on our reasonable assumptions of what a rational hotel behaviour should be, we may be able to take advantage of that by improving our strategy. (who says I am mind-twisted? biggrin.gif )

So if you know anything about that, feel free to share!


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The above doesn't reall have to do with the topic of this thread "Bid Early or Late", but i'll answer the question(s) above and hopefully this thread wont go too far off topic...

Simply put: Hotels load rates into a booking system and these rates are only accessible by PRICELINE and HOTWIRE. When you place a bid priceline accesses this data and looks to see if there is a hotel with a rate loaded able to accept your bid, if so they book that hotel and you own it. When you do a search on hotwire they access this data and offer you one hotel (the lowest priced hotel at each star level in each zone). PRICELINE makes their money on booking fees and amount of an overbid (and it is believed in some hotel agreements a commission on the sale as well)... HOTWIRE makes their margin on booking fees and also on a markup to the rate the hotel has loaded into the system.

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Thank you for the answer.

I am sorry you believe this is off topic but actually, knowing exactly how the system works does have an impact on what your strategy should be in terms of early/late bidding.

if the hotels act rationally, for a usually busy period, they will not feed rooms into priceline/hotwire until the very last moment (hoping to sell the rooms without hard discount for this period). If eventually their reservation rate does not meet their expectations, then they would put rooms on the site. My guess is in that case, good rates should only appear at last minute.

for usual off season, hotels should start feeding the sites with good discounts quite early, to get clientele from other hotels (clients are scarce). They will discount eventually even more in the last days if they have not sold their discounted rooms.

But I guess a hotel caps the number of rooms he will sell through hotwire/priceline.

of course you should also take into account specials events : conventions, etc... or on the other side, bad economic news, xhich impact hotels and hospitality/tourism business very quickly.

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One question here. If Hotwire and Priceline both access the same booking system, then wouldn't that mean that no fare from Priceline will be below the fare at Hotwire if Hotwire always displays the lowest fare for a star zone? So if you're bidding on Priceline at a rate below the one offered on Hotwire you will not get it until your offer matches or is above the offer on Hotwire.

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HOTWIRE and PRICELINE compete with each other, they each have their own booking system. If a hotel manager chooses to participate with Priceline, they will "load" room inventory into Priceline's booking system, this could be at one or more rates. Think of it like the stock market where offers to buy (bids) are matched with offers to sell (ask), when your bid is equal to or is greater than the hotel's ask, PRICELINE will complete the deal and pocket a commission and in many cases, the spread (the ammount between the bid and ask price). This same hotel manager will load prices into the HOTWIRE system, however, HOTWIRE will only present the hotel with the lowest price in a given star category.

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A little to add from my experience working in the industry...

Keep in mind that the "revenue management" function is undertaken by a human. In a large, upscale hotel (4*) this is typically an individual whose only job is maximizing the revenue to the hotel (Revenue Manager). At a smaller, lower class hotel (say a 2*) this is often one of many duties of the General Manager or perhaps the Front Office Manager/Assistant General Manager.

Loading inventory into priceline, then, is primarily a function of what that individual person thinks will most likely maximize revenue for a given date. This can change based on time frame, particular dates, and unforeseen circumstances. But above all, it is based on the opinion and judgement of that person, perhaps with the input of the rest of the leadership team. Also, keep in mind, this person sets not only priceline inventory, but also the rack rates for the hotel and the availability of other discounted rates, such as AAA or Entertainment Card.

Some data sources this person will often use:

- Last year's results for the same date and season

- Their hotel's negotiated room blocks and expected yields

- Calendars of events in town

- The target parameters set by management, such as Average Daily Rate (ADR) and Revenue per Available Room (RevPAR)

- Renovations happening at the hotel - and their likely impact on bookings and number of rooms available

- Weather reports

Some example scenarios:

1) There are certain dates that, a year in advance, a revenue manager will know with near certainty will be revenue disasters. For example, an airport hotel in a warm weather region on Christmas (no business travelers, no one stuck due to weather). Or a tourist hotel on a Tuesday night in the Northeast in February (too cold). In these scenarios, it would make sense to load many rooms as early as possible at a low rate, to secure the few travelers available as early as possible.

2) A prime weekend in a busy tourist travel season. In this case, the revenue manager would likely set the retail rate high in advance and re-evaluate as the arrival date gets closer. They would also typically impose a two night stay minimum for Saturday (to force arrivals on Friday rather than Saturday morning). As the arrival date gets closer and closer, the revenue manager will evaluate both the quantity and quality of bookings, and perhaps release a little additional priceline inventory to fill in the gaps. Keep in mind, they will often intentionally overbook the hotel if there are many cancellable reservations made well in advance - assuming some people have forgotten they made the reservations or will cancel at the last minute.

3) There is a large convention in town. Even though the hotel may offer a special rate for the convention, it is uncertain how many will attend. Business travelers tend to book closer to the arrival date than leisure travelers. There is also higher uncertainty - travel plans may change at the last minute, especially with a convention considered "optional" compared to other work responsibilities. Depending on how low occupancy looks, the revenue manager might release priceline inventory - but would probably be more likely to release rack rate, retail inventory, looking to capture non-convention travelers who are faced with many sold out hotels.

The revenue manager is monitoring scenarios like these for every arrival date, months in advance. He or she will often make changes on a weekly or daily basis in how many rooms are available and the room rates.

So the bottom line is, aside from dates that are likely disasters for occupancy, it's nearly impossible to tell if booking early or later is better. Since the specific inventory and rate levels depend on the revenue manager's style, there's no clear way to know when inventory will be loaded to priceline unless you study that person's track record and somehow gather all of the same information he or she uses.

Given that, thereuare is probably right. Book a cancellable backup reservation then begin bidding as early (and consistently) as you comfortably can, for your best chance at saving money. Also, for the sake of the revenue manager and the probability of priceline inventory becoming available, cancel that backup reservation as soon as you win. :)

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There are also Corporate Revenue Managers who can have multiple hotels (same and or different brands) to control in one city/area or even a state/region.

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A search on Google News for "travel deals" yields quite a bit of reports on hotels dropping prices last minute.

But as mentioned before, Priceline and Hotwire have a block of hotels already allocated and are probably not going to be subject to those last minute rates. And of course you are risking availability.

www.yapta.com has a function "Track Price Drop" where you will be notified when the hotel drops their price. Not sure how these prices will compare to PL/HW though.

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That article is for traditionally booked rooms and is not PRICELINE / HOTWIRE centric.

As well, it can be argued that at the time the article was written we were heading deeper into the trough of the business cycle (think of the downward part of a valley) so as even if you book on the way down things still got cheaper as time went on (deeper down the hill of the valley)... as we come out of the trough of the business cycle (up the hill on the other side of the valley) i suspect you'll see the opposite take place, and rates will rise as time passes since hotels will be getting busier (and we come out of the trough of the business cycle) instead of slower.

Bottomline still holds true: know what a good deal is and take advantage of it whenever it presents itself.

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No matter what, you should ALWAYS first make a reservation at a hotel that is FULLY refundable.

You mean before you start the PL process? Is this true once you have a reservation through a successful PL bid?

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You mean before you start the PL process?
Is this true once you have a reservation through a successful PL bid?


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One question here. If Hotwire and Priceline both access the same booking system, then wouldn't that mean that no fare from Priceline will be below the fare at Hotwire if Hotwire always displays the lowest fare for a star zone? So if you're bidding on Priceline at a rate below the one offered on Hotwire you will not get it until your offer matches or is above the offer on Hotwire.

see above. HOTWIRE has different mark-up as a revenue mechanism, whereas PRICELINE siphons off more revenue on overbids. both sites also can make money on site advertising.

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PRO about waiting closer to the arrival date in prime locations is that you might get multiple posted wins in your category on the dates you are bidding on. This worked for me as I was able to pinpoint the price threshold and the hotel in a prime location (Disneyland).

Like many have said - know a good deal when you see it!

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