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Just trying to get a feel on how Priceline does business vis-a-vis hotel rates.

We just had a one night stay at the Uptown Sheraton in Albuquerque. If I recall had first bid accepted at $40 per night, for a total with taxes and services fees for $52.52.

When I checked out via the TV checkout process, my bill came up as follows:

Room $38.00

City Tax 1.90

Hospitality .38 not sure what this is about???

State Tax 2.57

_______

Total $42.85

Difference being $9.67...is this the service fee imposed by Priceline, and if the bid had been $38.00 would I have won the bid? Just trying to understand the process, so any comments would be greatly appreciated.

Thanks.

SteveR

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Yes - $38 would have likely worked.

PL's unit profit in this case was base fee of $7.67 plus $2 overbid for the $9.67 total.

Their best internet rate was probably twice what you paid though so all in all a great deal.

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An overbid? Not so certain.

Last week I had to bid $37, $38, $39 until I finally got a hotel at $40 (all tries included the zone where a bid was eventually accepted). At check-in, the list of arriving guests for the evening lay on the counter by the agent, where I could see the rate next to my name - $36.80. So you would think that the $37 bid should have gotten the hotel, but that was not so.

Evidently there's more to Priceline's computer logic than just adding tax and a service fee over the hotel's rate. There seems to be a slight markup as well.

And then, as if to further disprove all theories, I remember a couple of times when the room rate shown on the folio was higher than my accepted bid...!

Lamenting the memory of days gone when the tax amount told us what the exact rate was... :)

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An overbid? Not so certain.

Last week I had to bid $37, $38, $39 until I finally got a hotel at $40 (all tries included the zone where a bid was eventually accepted). At check-in, the list of arriving guests for the evening lay on the counter by the agent, where I could see the rate next to my name - $36.80. So you would think that the $37 bid should have gotten the hotel, but that was not so.

Situations such as this always cause me to wonder if the difference between the supposed vendor-to-Priceline rate vs. the bid acceptance rate is to cover energy fees and any other type taxes/fees along these same lines.

In other words, would a $37 bid have been accepted *if* the hotel made a practice of later billing such fees upon check out? On the flip side, a hotel that has a $37 Priceline rate, but chooses not to bill the guest an energy fee upon check out, won't accept anything less than $40, in order to collect on the fee through the bid process.

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The difference of $9.67 represents Priceline's fee gross margin for this booking. That works out to be over 20%, which is typical for both PL and HW. Had Priceline accepted a bid for $38, I believe it would have reduced its payment to the hotel to still retain a 20% margin. A recent Hotwire booking revealed that the hotel was paid $49.00 for room and taxes, but Hotwire charged me $56 for the room and $14 for taxes and fees. Hotwire made a gross margin of $21 for this single booking, not bad!!!!

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Got my bill today from Hyatt Huntington Beach and it showed a pre payment of $153.18 from PL for my winning bid of $69 X 2. The bill said $69 per night + $7.59 tax.

The total price for my bid with fees was $163.16.

Looks like PL made about $10 from my bid. Not bad, I save 75% and PL charges me $10 for the help. :)

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