DON"T bid higher for a specific hotel

[bbbb]

Theres no need to charge a commission when you have hundreds of people over bidding everyday.Those people all mean $$$$ to priceline.Plus theres the little fee PL charges us.

[thereuare]

.... but as i understand it, they do get a commission from the hotels (just as a travel agent would).

[gleff]

I'm not sure what the link is talking about - perhaps it's outdated (Summer 2002) or perhaps the explanation is that the commission is paid to the hotel company's GDS who then pays it to Priceline.

I do know that one of the biggest hotel chains in North America advises its properties of the commission paid to Priceline.

[BEAV]

Priceline is going to sell the room that they can make the most money on.Over bidding is only going to put you into a hotel that you would have gotten for less.Just my take on the matter

If that were the case, then all a hotel has to do is ensure their Priceline rate is lower than all the other competitors in town in order to "capture" each Priceline bid made. I cannot see where hotel chains, collectively, would agree to such an arrangement.

Living near SF, I follow the award postings closely. Not too long ago, someone posted on TOBB getting the Renaissance Parc 55 for $75. The majority of the times, we see winning bids in the $55-70 range at the Hyatt, Marriott & Hilton. In this case, the poster's initial bid was $75, as opposed to starting lower and working up. I'd be willing to bet a lower rate was available for their date at any one of the other 3 hotels. Can't prove it, but it's a pretty clear indication to me that Priceline books at the highest qualifying rate.

The problem in Cindywuer's predicament, as I see it, is not knowing all of Priceline's rates at both the Wyndham & Gaylord. That's what makes targeting a specific hotel nothing more than a gamble. Sometimes you'll win, other times you won't....no different than Vegas!

[gleff]

Used to be in Midtown East (NYC) the Grand Hyatt was available regularly at $75... and it would take a bid of ~ $95 before any other hotel would come up.

Recently a friend went all the way up to $140 in MTE, finally getting the Grand Hyatt at $140.

So goes the old adage not to bid higher looking for a specific hotel. In this case he was more than happy with the Grand Hyatt at $140 -- but it's a good lesson that a $140 bid doesn't imply a different hotel in MTE (just a chance of a different hotel).

[Ringman]

Yes, hotels can input a whole lot of rates (more than 50, though few do AFAIK).

One result is that hotels get more of the overbid.  But the real driver is just more revenue to a hotel.

Say that there's only one 4* hotel in a zone.  That hotel has rates of $55, $65, $75, $95, $125.

If they just had their $55 rate and someone bid $80, the hotel would only get $55. 

Now wait... if Priceline has a hotel like the above, and 6 months before the date of travel, they receive a bid of say, $100- wouldn't the prudent thing be to fill that room with the $55 or even $75 rate-

They would thereby clear one of those rate levels (in this simple example - assuming one room per rate level) at an early date and maximize profit with the hotel still having the ability to adjust PL rates again and again as the travel date approaches.

Assuming also that PL is not an idiot with open books to its customers.... they simply report to the hotel that the $55 or $75 room is gone (according to what their market research tells them is the optimal price point to erase) and than await more bids and potential for the hotel to lower its rates as the date in question approaches to clear the room.

hmmm?? :)

[BEAV]

Ringman,

Using your theory, how would Priceline handle the situation if there were two hotels in the zone, rather than just the one, as in your example?

Let's say Hotel B has rates of $58 $68 $78 and $98.

Which hotel is Priceline going to assign on the customer's bid of $100?

[DeltaPurser]

I think PL is in it for the long haul... They benefit more by being honest and upfront not only with us, but with their participating hotels as well. I don't think they are trying to pull one over on either one of us.

As far as Ringman's theory about "clearing" the lower rate room first... I'm not sure I follow the logic in that. A car dealer is not going to tell a customer who wants to buy a Mercedes to get a VW, because "maybe someone will come along later and want a Mercedes". I'm sure both PL and the hotel will take the money and wait for the next sucker to come along and bid $100 again.

Then again... I could be wrong. (It's been known to happen!)

DeltaPurser :)

[Ringman]

I'm not sure I follow the logic in that.  A car dealer is not going to tell a customer who wants to buy a Mercedes to get a VW, because "maybe someone will come along later and want a Mercedes".

But you see, the beauty of it all is that everyone is getting the Mercedes, and if they bid high- they'll still be happy with their $100 room, even though someone may get the same room another time for $41 ....

[Ringman]

Using your theory, how would Priceline handle the situation if there were two hotels in the zone, rather than just the one, as in your example?

Let's say Hotel B has rates of $58 $68 $78 and $98.

Which hotel is Priceline going to assign on the customer's bid of $100?

This is where their Pricing Modeling software kicks in.....

They have sufficient data on most locations, or can apply the data from other areas, to create a Model that identifies the likely pricepoints to be bid, perhaps with respect to time before travel (i.e. - 5 months vs 2 weeks).

If they don't use intelligent forecasting... with all the data at their fingertips.... well than maybe the should be offering me a job right about now...!!

As to which property they assign the $100 bid- Mathematical calculations are not affected by fractious price points- the Model should identify the pricepoint to use.

On the other hand, as we all know, the politics of salesmanship makes the world go 'round--- For instance, a new property(PL customer, that is) might actually either sell faster or more profitably for the property, depending upon what PL sales managers have promoted to their clients!!

(by the way, I work for peanuts and free travel!!)

[cakobau]

I saw this thread referenced in another posting today, and I got sucked in. One person above referenced THIS LINK to a Priceline "slide" which describes several aspects of their business model.

While most of this thread has focused on the question of intentional overbidding and the subsequent choices that Priceline makes in assigning a room to a bid, the slide also addresses my own mini-obsession: using Priceline Vacation Packages as a proxy for hotel-room-only availability.

In particular, the slide states that the Vacations search uses the **same infrastructure** as the Hotel search, and that suppliers are therefore not required to do anything different in order to have their rooms included in Vacation searches. This suggests that the hotels that are NAMED in Vacation searches are all in the Hotel-only list... They may not be all of the possible hotels, but they are indeed contenders. FWIW.

[Ringman]

Oh yeah.. definitely methinks cakobau--\

Every Vacation hotel i've seen , seems available in the general hotel only category- via empirical and actual evidence (reported wins...)

By the way-- on this same thread...

I just had my friend book three nights at the Austin Hilton--4* downtown-

i knew this:

1. there are three reported winnable downtown 4* 's

a. Hyatt avg price $47- $50

b. Omni avg price $47- 50

c. Hilton - lowest price $60

2. availability through multiple travel sites for all three.

3. His immediate intention of paying for a 3* Ramada on Orbitz for $129-$139 a night.

We put in one bid (him being a PL virgin)- and had him bid $65- guaranteeing him that if he would get the Hilton.....

(not wanting to go through the intricacies of rebids, etc over the phone with him... and keeping him in a relative "comfort zone" of a single bid...)

Now.. to prove the theory.. I would need to go bid /rebid from $45 + til I get the Hyatt or Omni....

Anyone like to kick into the kitty for the sake of research!! :)

[thereuare]

I think what you're seeing is the way we 'know' it works, but perhaps i'm missing something.

The point of 'not bidding higher for a specifci hotel' comes downt tothe problem of: What if the Hilton wasn't available? Essentially your friend would have received the Hyatt or Omni and would have overbid.

In this instance the difference is assumed to only be $10, and maybe with these hotels it's worth risking an extra $10 for the prefered hotel... but what if the difference is $20? what about $30? etc, etc. Then if the stay is for multiple nites it can start to add up to some money.

[Ringman]

I actually had him "overbid" by $5 ($15 for the three nights) for the Hilton---

Had I been bidding for myself- I would have bid starting down around $40 ish-- and been pleased with the Hyatt or Omni when I hit it...

But in this case- he would have been thrilled with $65- an apparent $20 ish over bid- to have received the Hyatt or Omni- looking at he was at purchasing 5 minutes later in the $129 range.....

So, for him, it was a no loose proposition---

For myself... if i really wanted the Hilton--- the only way I could have a shot at it would be to risk the overbid if I received the Omni or Hyatt- tempered by the knowledge that there were rooms at the Hilton currently available elsewhere, as well as recent data to show Hilton "wins" @ $60.

I just relay this transaction as further "evidence" that PL does indeed match the bids to available higher priced rooms(Hilton), rather than taking the immediate higher profit match to a lower priced room (Hyatt, Omni).

[dahammer]

Ringman, I checked out the link and viewed the slide show and on slide 4 pulled the following quote:

"Hotels are first searched randomly with all subsequent searches ranked by hotels performance.

We always book the highest rate the hotel has available that qualifies for the offer"

Given your example, does this mean that PL booked your colleague into the Hilton at $60 because that price matched the Hilton's minimum price criteria that Hilton loaded into the "SecuRates in WorldSpan" system? It sounds that PL does not maximize the hotel revenue, it is just matching "buy offers" (customers) with "offers to sell " (hotels) much like on the NY Stock exchange does with Market Makers who match buyers of stocks and sellers of stocks in a bidding. Just like they did under the tree on Wall Street hundreds of years ago....

The risk of overpaying is that the Hilton may be sold out for $60 rooms and then you would be put into a hotel not of your choice....Do I get this right??

[thereuare]

I think the Stock Exchange example is a perfect one (if you understand how wall street operates). A good one sentence answer: The hotel will be awarded to the hotel with the highest rate below (or equal to) the user's bid amount.

However, i see another potential 'problem here' (and we're really splitting hairs here and getting into 'complex behind the scenes stuff'... so new users should not feel the need to understand this in order to feel comfortable using Priceline):

Since hotels can, and do, load multiple rates, lets take this a step further and hypothetically load multiple rates into the system (lowest rate is shown outside of the parentethis, subsequent higher rates are shown in paranthesis):

a. Hyatt prices $47 (50, 57, 63, 65, 67, 70)

b. Omni prices $47 (50, 55, 60, 62, 64, 67, 70)

c. Hilton prices $60 (66, 68, 70)

Using the above hypothetical example, a bid of

$60 - Omni or Hilton

$61 - Omni

$62 - Omni

$63 - Hyatt

$64 - Omni

$65 - Hyatt

$66 - Hilton

$67 - Hyatt or Omni

$68 - Hilton

$69 - Hilton

$70 - Hyatt or Omni or Hilton

So although the above example is purely hypothetical, i think it shows how hotels loading multple rates can cause a user who bids higher for a specific hotel to have that plan 'backfire'. Of course in the real world example Ringman was only risking a few extra dollars and perhaps that risk was worth it, but this example shows how there just aren't any guarantees (and perhaps less of a 'lay-up' than most users would think).

[BEAV]

Thereuare,

I believe your theory above is 100% right on. Accepting the fact that hotels have multiple Priceline rates makes bidding for a specific hotel a true crap shoot.

[johnp012001]

I think the Stock Exchange example is a perfect one (if you understand how wall street operates). A good one sentence answer: The hotel will be awarded to the hotel with the highest rate below (or equal to) the user's bid amount.

However, i see another potential 'problem here' (and we're really splitting hairs here and getting into 'complex behind the scenes stuff'... so new users should not feel the need to understand this in order to feel comfortable using Priceline):

Since hotels can, and do, load multiple rates, lets take this a step further and hypothetically load multiple rates into the system (lowest rate is shown outside of the parentethis, subsequent higher rates are shown in paranthesis):

a. Hyatt prices $47 (50, 57, 63, 65, 67, 70)

b. Omni prices $47 (50, 55, 60, 62, 64, 67, 70)

c. Hilton prices $60 (66, 68, 70)

Using the above hypothetical example, a bid of

$60 - Omni or Hilton

$61 - Omni

$62 - Omni

$63 - Hyatt

$64 - Omni

$65 - Hyatt

$66 - Hilton

$67 - Hyatt or Omni

$68 - Hilton

$69 - Hilton

$70 - Hyatt or Omni or Hilton

So although the above example is purely hypothetical, i think it shows how hotels loading multple rates can cause a user who bids higher for a specific hotel to have that plan 'backfire'. Of course in the real world example Ringman was only risking a few extra dollars and perhaps that risk was worth it, but this example shows how there just aren't any guarantees (and perhaps less of a 'lay-up' than most users would think).

Ok, I'm not understanding the multiple rate thing. Wouldn't there have to be some sort of different criteria for each of the rates? Different rooms, different dates? Otherwise, why post 50 different rates at $1 increments? The one hotel who's rate card I was able to see showed they had 3 different priceline rates, but they were applicable during different times. It was $31 for slow periods, $33 for normal periods, and $37 for above normal periods. Someone help me understand this multiple rates for the same day concept!

[thereuare]

There can be as many rates as priceline allows the hotel to have.... just the way they set it up.

[dahammer]

I believe it follows the rule of supply and demand, that is, on any given date, based upon the occupancy levels, a hotel will offer rooms to the Priceline system. If the hotel is near sell out, it may not offer any rooms to Priceline. The Jersey City (NJ) Hyatt, as an example is often tough to get from Monday-Thursday as the hotel is filled with guests on business expense accounts paying the top rate. On weekends, if the hotel anticipates vacancies, in an attempt to maximize the revenue of the hotel, some of its inventory is put up for bidding. Instead of offering its rooms for one price, it will offer rooms at several price points, and through the bidding process, offers to sell are matched with offers to buy (your bid). By monitoring the postings on this board, and armed with its "a posteriori knowledge", you can start with a lower bid which just might match the hotel's offer price. By not monitoring this board, you might start out at a higher bid, such as your example above, bid $70 and get the Hyatt when a bid of $47 may have won the same room (as long as others have not won all the available $47 rooms). But you might also get the Omni, so you can't always be assured of getting a specific hotel, just a hotel with an offer price that matches your bid that corresponds to its star rating (4*, 3.5*, etc.)

[Ringman]

By not monitoring this board, you might start out at a higher bid, such as your example above, bid $70 and get the Hyatt when a bid of $47 may have won the same room (as long as others have not won all the available $47 rooms). But you might also get the Omni, so you can't always be assured of getting a specific hotel, just a hotel with an offer price that matches your bid that corresponds to its star rating (4*, 3.5*, etc.)

Which is why, over time, I have "trained" my family and friends to expect to be flexible on all our PL traveling!!

With that in mind, it seems like I have been hugely succesful at getting the the specific hotel (when I have one in mind), due entirely to the information on these PL boards!!!

Now, on occasion, I have had to break up a one week stay into say, 5 days in a Hilton and 2 in a Hyatt- or something similar-- and often have had to break up my bids into several segments to get my targeted prices- (Mon- Wed, Thursday-Friday, Sat- or some other configuration) - even when staying in the same hotel (usually allowed to stay in the same room, but not always!!

[blindman]

Reading this thread last week (slow day at work :) ) I have a question.

How does this theory stand up to the Counteroffer and the 'upgrade' winning bid?

I've just had a $45 bid for a 3* at LGW counter offered at $68.

The 'historical' rate ranges from $47-65.

In 72 hrs I'll try again but at $47.

So how does PL work the 'almost there' bid ? I know the counter offer value is usually way OTT so is irrelevant, but at what margin does this counter offfer kick in and why is it not consistent with all Hotels?

I assume with the 'upgrade bid' that the amount is the lowest rate a 3* has in the area.

Any ideas?

[thereuare]

There doesn't seem to be a known methodology to Priceline's counter-offers... but i suspect that it either has something to do with: 1) a hotel agrees to have their property produce a counter-offer or 2) something in their contract with the hotel that makes it more lucrative for them to book that property (perhaps a higher commission rate)

[freespirit]

Interesting topic - made more pertinent to me as I recently bid $75 (plus taxes) and got the Hotel first time. Pushed under my door was a bill showing my rate at $64 (plus taxes) - my address was shown as Norwalk, CT (ie Priceline's). I doubt if the hotel had not put another line it at $74 or $75 and Priceline must have got the extra $11 (plus taxes).

[kohalasunset]

I don't know if anyone has addressed this, but I read (somewhere!) that PL will sell at cost, and sometimes below. This would make sense if a property is being offered for the first time in a competitive market to help it gain immediate exposure. Of course there could be other reasons they would do this, if it was/is true. Would welcome any thoughts on this!