[Sam]

Hi,

I am trying to book a hotel today via priceline ( no luck so far ) and everytime I have to wait for 10 minutes even to the point of 20 minutes. Has anybody had this annoyance today?

I know sometimes it can take a bit longer but today it is with every bid I do...

[thereuare]

Sometimes they revert back to their old ways, "We Should Have an answer for you within 15 minutes".

A little bit more a hassle, but hopefully you won't mind once you're successful

[Sam]

I am losing precious time here . I forgot to mention it, I had also a few time internal server error 500 .. Maybe really busy

[WillTravel]

I have heard that Priceline has changed their system so that you no longer see taxes and the $5.95 fee separately, but bundled together. Also, the service fee is no longer consistently $5.95. If so, this is a *very* recent change. But it might explain why the computer systems are slow. Can anyone confirm this is actually the case?
Edit: This is true.
Here's what the confirmation page shows for a bid for Copenhagen for July 4-6.

Offer Price Per Room, Per Night: $50.00
Subtotal: $100.00
Taxes and Service Fees: $30.70
I haven't submitted the bid yet. Taxes are supposed to be no more than 20% under Priceline's old system. That would be a maximum of $10 per night, so that is $20 tax (maximum). Then the fee would be $10.70 for the transaction. However, if they used the real 25% tax figure, then taxes would be a total of $25, and the service fee would be $5.70.

So I'm going back and putting $55.
Offer Price Per Room, Per Night: $55.00
Subtotal: $110.00
Taxes and Service Fees: $33.32
Total Charges: $143.32
(again not submitted)
If they were using the 20% maximum, then taxes would be maximum $22 and the service fee would be $11.32. If they are using 25%, then the taxes would be maximum $27.50, and the service fee $4.88.

I don't think this bid has any chance ($50 or $55 for a 4* hotel in Copenhagen!). But you can run the same test with other bids - just don't submit them. Maybe we can work out an algorithm.

Edit: Tried just one night this time.
If I bid $50 here - then total charge $67.60
If I bid $55 here - then total charge $73.91
If I bid $60 here - then total charge $80.22

The difference as you move from one to the next is $6.31.
Similarly, for my 2-night bids, the total difference in charges between the $50 and $55 bid works out to be $12.62 (double $6.31).

[Scorp]

This could be a real mess to deal with!

From the Priceline bidding screen:

"Total charges, including taxes and service fees, are shown on the next page."

Clicking on the 'taxes and service fees' link gives the following description:

**************
Are taxes included in the price I name?

No, the price you name is for the hotel room rate only, exclusive of taxes and service fees. All hotel rooms are, however, subject to city and state taxes, which vary based on the city you are visiting. We will calculate these taxes and our service fees related to your offer and present a total before you submit your request.

Also, depending on the city you select, a local tax or "Hotel Occupancy Tax" may apply. These taxes will be added by your hotel and will be payable upon check-out.

These are the same taxes that apply if you reserved rooms through a travel agent or directly from the hotels.

What taxes am I charged for?

The tax charge on priceline.com hotel transactions includes all applicable taxes paid by priceline.com to the hotel in connection with your travel arrangements. Taxability and the appropriate tax rate vary greatly by location.

What are the service fees?

These fees cover the costs incurred by priceline.com in servicing your travel reservation.

**************

It seems to me that the local tax or 'hotel occupancy tax' used to be included in the Priceline taxes. I don't think it was separated out before, was it?

[Scorp]

However, Priceline's FAQ still states:

Does priceline charge a fee for hotel offers?

If your priceline hotel offer is accepted, we add a standard $5.95 per room charge to the final cost charged to your credit card to cover processing costs associated with your offer. If your priceline hotel request is not accepted, you pay nothing.

[WillTravel]

Scorp, on May 13 2003, 01:27 PM, said:

However, Priceline's FAQ still states:

Does priceline charge a fee for hotel offers?

If your priceline hotel offer is accepted, we add a standard $5.95 per room charge to the final cost charged to your credit card to cover processing costs associated with your offer. If your priceline hotel request is not accepted, you pay nothing.

It's possible that is something they forgot to delete.

Good question about the local tax or hotel occupancy tax - I thought that was maybe for special fees where you had to pay extra, but now who knows.

[Scorp]

Also, from the FAQ:

What taxes and surcharges will I pay?

If there's one thing in life you can't avoid, it's taxes, and hotel rooms certainly have their share. So in the interest of being up-front, here's a breakdown of the taxes and fees you'll pay when you buy hotel rooms through priceline.com - which, by the way, are the same taxes and fees you would pay if you buy rooms through a travel agent or from the hotels directly:

Standard state and local taxes (which currently average about 12% and will not exceed 20% of your offer price) are not included in your offer price - they will be added to your total cost and charged to the credit card you provide if a participating hotel accepts your offer.

Depending Depending on the city and property you stay in, you may also be charged a "Hotel Occupancy Tax", resort fees, parking charges, room service, etc. as these costs are not included in the price you pay priceline. These charges, if applicable, will be payable to the hotel directly at checkout.

On both U.S. and International hotel offers, priceline adds a standard $5.95 per room charge to the final cost to cover processing costs associated with your offer.

[WillTravel]

I tried Burbank, CA for one night (which apparently has a tax rate of 10%).

$20 - $27.54
$25 - $33.30
$30 - $39.06
The increment here is $5.76 per $5 bid increase.

So I tried:
$80 - $96.66 - sure enough, the $5.76 increment continues to work.

[WillTravel]

Tried this with Victoria, BC (which also used to have a 10% tax rate charged by Priceline). Unsubmitted bids for a one-night stay:

20 ->$26.74
25 ->$32.30
30 ->$37.86
100->$115.70

Here, with each $5 bid increase, the change is $5.56.
Thus, in the three cities I have tried, the incremental change is constant, but I haven't tried different nights for the same city.
Note that both Burbank and Victoria should have the same tax rate, but the increment is different.

[Scorp]

It seems to me that there were considerable consumer complaints about Priceline not showing the complete charges for items that were being bidded on. People complained that they did not see the real totals that they would be charged, because tax and service charge information was not complete before the bid. Of course, if knowledgeable bidders saw the tax rate in advance (and it was still based on what Priceline paid the hotel) then we would always know the lowest bid that would be accepted!

At the same time, I believe some state and local governments were concerned that Priceline did not charge tax appropriately, that is, they did not charge on the total consumer purchase (in the case of hotel bids). And this meant less tax for state and local governments.... Also, I believe travel agencies have to assess tax on the consumer purchase amount, so they felt Priceline had an unfair advantage.

I wonder if Priceline is trying to deal with all these concerns (and also make the bidding process somewhat more opaque) by redoing the way that taxes are calculated, and perhaps in the case of hotels -- charging tax based on our bid amount and not on their purchase price from the hotel???

Also, please see my post on car rental tax calculation in the Car Rentals forum.

thereuare, what do you think of all this?

[thereuare]

Scorp, on May 13 2003, 03:43 PM, said:

thereuare, what do you think of all this?

I've elected not to do any thinking today, but since you asked, i'll have to re-think that idea

My guess is that it is an attempt to show the total upfront before a purchase is made. However, in doing so, you are correct that educated users would be able to figure out the lowest accepted bid amount and then start the process over, re-submitting the lowest possible bid. As a result,, Priceline had to make their fee variable, and combine it with the taxes, in order to continue their 'opacity' (is that a word?), something that i'm sure they're not entirely opposed to anyway.

I would think that the taxes based upon Priceline's cost getting passed along to the consumer, regardless of the user's bid amount, is more of a legal issue than a conscious business decision. It's my understanding that the hotel tax is based upon the hotel's room rate, and any 'overbid amount', plus Priceline's fee, is treated as profit for Priceline, for which it pays income tax on at the end of the year. Priceline certainly couldn't collect hotel tax on an amount that was not attibuted to a hotel's cost.

So by example, let's assume an terrible overbid, where Priceline's cost of the room is $50 and the user pays $100, with taxes at 10%. Priceilne's tax rate on the room would be $5, but the user would pay $10, what would happen with the $5 difference between the amount the user paid and the amount collected? I'm sure consumers' would say it is their's, the gov't would say it's a 'collected' tax and belongs to them, while Priceline would want it for themselves! A whole can of worms would open up, so i would think that the taxes, based upon Priceline's cost, are still simply passed along to the end user.

I could be wrong, but those are my thoughts.

[WillTravel]

Quote

I wonder if Priceline is trying to deal with all these concerns (and also make the bidding process somewhat more opaque) by redoing the way that taxes are calculated, and perhaps in the case of hotels -- charging tax based on our bid amount and not on their purchase price from the hotel???

It's possible Priceline is now paying taxes on the bid amount, as many states want them to do, like you said. But the new system doesn't indicate to me that they are necessarily doing this.

The only thing for sure is that you can no longer tell anything by the taxes and service fee combo. Whether you bid $50 and get a $50 Priceline room, or bid $50 and get a $30 Priceline room - your total payment in each case will be exactly the same (if both bids are in the same city).

One more thing. The new total charge seems to be based on the total amount for all nights. So a ($25 bid for 4 nights for 1 room) or a ($100 bid for 1 night for 1 room) or a ($50 bid for 1 nights for 2 rooms) end up with the same total charge (by my experiments).

[Scorp]

Well, I think there was some discussion about the nature of the 'agency' between the hotels and Priceline (and a similar question with airlines), but please don't hold to me all the details - I just have some hazy memories of reading some of this stuff a while back (including the whole thing about tax calc). I could be totally off track.

But I think one of the points made was that travel agencies collect taxes from the end consumer based on the consumer purchase price, not on the pre-arranged hotel rate that the agency might have obtained. Am I imagining this, or does this sound familiar to anyone else???? Is this even the way that travel agencies work?

Are there any lawyers or travel agents in the audience today???

So I did the best thing I could think of, I sent an email to Priceline asking if they still charge a flat-rate of $5.95 for hotel bookings or not!

I should get an answer back right around the time the World Series start, what do you think???

[WillTravel]

I think you are on to something with the agency relationship issue. And you're right that some states were complaining about the tax issue just as you described it.

I did get an answer back to my question about how upgrades work within a couple hours last time I tried emailing Priceline (although the info is wrong, can't have everything ) I just looked again and they are still having their old erroneous information in the Help about taxes and charges.

I did go to law school, but I'm not practicing as a lawyer, and particularly not in the field of taxes

Priceline Hong Kong is still doing Priceline bids the "old way," for now anyway.

[thereuare]

I think that Travel Agencies act as "agents" and don't take posession of anything, they just facilitate a transaction, and therefore the taxes are based upon the hotel rate, which is simply passed along to consumers. The agent is then paid a commission by the hotel, which has no effect on the taxes paid, but is probably treated as an expense by the hotel.

This would be different than a consolidator who purchases a block of rooms in bulk and at a discount (and therefore takes possession of them) and then re-sells them. In this instance, i think the consolidator wouldn't pay tax on their own purchase since they're bought for re-selling purposes (much as a wholesaler doesn't pay taxes on the goods they intend on re-selling), but would collect the tax when the goods are sold to the end consumer.

The above is my opinion, and i am neither an accountant, travel agent, or attorney.

[Scorp]

Well, here is the reply from Priceline, and yes, they are now referring to a "variable service fee."

*****************

Dear Sir,

Thank you for taking the time to send us an e-mail. We understand that
you are inquiring about the fees and taxes for hotel reservation.

We do not have the breakdown of the taxes and fees available. Our system calculates the taxes and fees and provides the exact amount the customer will be charged on the contract page for their review prior to
submitting the offer.

The taxes and fees charged on priceline transactions include all applicable taxes paid by priceline.com to the hotel in connection with your travel arraignments as well as a variable service fee. Taxability and the appropriate tax rate vary greatly by location.

That said, hotel rooms are subject to a per night city and state tax,
which vary based on the city you are visiting. We calculate these taxes
and our service fees related to your offer and present a total before
you submit your request so that you can view all possible charges prior to submitting your request. These are the same taxes that apply if you
reserved rooms through a travel agent or directly from the hotels.

Keep in mind that some hotels charge customers a minimal occupancy tax
that may be applied to your room charge and will be payable to the hotel upon check-out.

We hope this information is helpful to you, and look forward to serving your future travel needs.

Sincerely,

Sunil A.
The priceline.com Customer Service Team


Original Message Follows:
-------------------------

Comments:Hi,

Can you please confirm that the hotel booking fee is still $5.95?

It seems that there are changes in the way in which Priceline calculates a
total purchase price on bids. Has the tax calculation also changed?

Thank you!

[thereuare]

OK, so i didn't delve too deep into this until tonite.

When clicking on Taxes and Fees, the pop-up window reads:

We will calculate these taxes and our service fees related to your offer and present a total before you submit your request..... The tax charge on priceline.com hotel transactions includes all applicable taxes paid by priceline.com to the hotel in connection with your travel arrangements.

The way it's worded, it seems to me as if any 'over-tax' will suddenly become part of the service fee.

For example, a $100 bid for a hotel room in a location with a 10% tax rate could show the following Taxes and Fees: $16.00 ($10 taxes and $6 for service fee). Now let's assume that Priceline's actual cost is $80, so the fee should be $14 ($8 tax plis $6 service fee), but i suspect that the combined taxes and fees would stay at $16 on your winning bid, and Priceline would keep that extra amount, "theoretically" moving the extra $2 in taxes to the service fee.

Hope i wrote this clear enough for others to understand.

[zbenye]

At least now comparing to a Hotwire offer is straightforward. No need to calculate an estimated total cost on PL.

[bturner13]

Yes you did and thanks!

I'm still in shock!

There are other gitches happening on the PL site. PL/US is not verifying all the time the 3 digit security codes that are inputted on their secure website!! Beware!

[WillTravel]

thereuare, on May 13 2003, 10:37 PM, said:

The way it's worded, it seems to me as if any 'over-tax' will suddenly become part of the service fee.

For example, a $100 bid for a hotel room in a location with a 10% tax rate could show the following Taxes and Fees: $16.00 ($10 taxes and $6 for service fee). Now let's assume that Priceline's actual cost is $80, so the fee should be $14 ($8 tax plis $6 service fee), but i suspect that the combined taxes and fees would stay at $16 on your winning bid, and Priceline would keep that extra amount, "theoretically" moving the extra $2 in taxes to the service fee.

Hope i wrote this clear enough for others to understand.

I think you are exactly right, and that's what all my test bids indicate.

[thesqueegeekid]

Oh good God ... I wish I wasn't in the middle of exams so I can keep track of this un-freaken-believable change. As Bturner commented, I am still in 'shock' too.

This is good for Priceline no doubt and steals from us the chance of calculating the lowest price and essentially, screwing us over ...!!!

The real reason for this change...

This is in response to them being suspected of not paying enough taxes ... they have been under investigation for while now. It is/was true .... as we would pay taxes on the portion that it costed PL. The balance went 'un-taxed'.

[thereuare]

WillTravel,

What i'm saying can't be determined until an actual bid is accepted.

I'm questioning if you could actually see the combined taxes and fees amount decrease once your bid is accepted.... decrease based upon the actual taxes Priceline paid compared to the taxes that were based upon your winning bid.


SQUEEGEE:

Quote

The balance went 'un-taxed'.

I suspect that this was 'profit' for Priceline and taxed Federally and at the State level in that sense, but probably not collected at inflated hotel tax rates in the hotel's location.

[WillTravel]

thereuare, on May 13 2003, 11:27 PM, said:

WillTravel,

What i'm saying can't be determined until an actual bid is accepted.

I'm questioning if you could actually see the combined taxes and fees amount decrease once your bid is accepted.... decrease based upon the actual taxes Priceline paid compared to the taxes that were based upon your winning bid.

Didn't Priceline used to have screens for something (maybe airfare) where you were given the maximum you would have to pay, but it usually turned out to be less? In this case, there's no such indication.

I would be reasonably certain that the price you are shown on the confirmation screen is what you will end up paying - do you agree?

But we do need someone to do some live field testing

[thesqueegeekid]

Actually, they never even had the chance to profit as we paid a bare minimum ... for example, a Toronto bid that cost PL $30 but we paid $45 which include the fees, taxes and an over-bid ... this would still only cost us sales tax on the $30.

The over-bid is clearly taxable as it is not stated to be part of the service fee. PL also had a problem as to what or whose sales tax rate they should use to charge us for that extra amount .... Now, they can just pay whomever and pocket the extra.

What is PL ... an intermediary, a re-seller .... all of this has been questioned by the investigation???