Is there a Priceline Master in the House?

I am not a real doctor (PhD). I only have a Master of Science. That is why I work for consumers instead of pocketing the lucrative research paycheck from the hotel industry.

The doctor, Chris K. Anderson, Ph.D., at the Cornell Center for Hospitality Research has come out with a report advising hoteliers how to squeeze more pennies out of our consumer pockets. This time the research is aimed to maximize hotel profits from Priceline.

http://www.hotelschool.cornell.edu/research/chr/pubs/reports/abstract-14705.html

The report is available for free download upon registration with the center.

Loyalty Traveler has a few comments on the report.

Cornell Report Statistic:
60% of online hotel rooms are booked through hotel-branded websites (I assume this is what is meant by “supplier-managed” websites).

Loyalty Traveler view: Hotels have provided incentive for customer reservations through hotel-managed channels by offering exclusive loyalty program benefits. In other words, Hotel points and frequent guest member perks are only guaranteed when booking through hotel-managed websites. The hotel websites generally offer a better rate , although special offer rates are often hidden from view to the casual online reservationist of a hotel room.

Report Statistic: 40% of online hotel bookings are made through online travel agencies like Expedia, Travelocity, Orbitz, and Priceline.

Loyalty Traveler View: Expedia and Travelocity and Orbitz are convenient. Priceline and other opaque sites like Hotwire.com generally offer the best discounts on room rates. A traveler has to weigh the factor of cost with the uncertainty of hotel location and brand. A frequent guest member does not earn hotel points and the reservation is likely to be booked in lowest category hotel room on property.

Priceline Bidding data:
A graph shows the number of bids in the two weeks prior to the date of arrival for the sample hotel. Data shows about 50% of all Priceline bids occurred in the 2 days before arrival.

The minimum acceptable Priceline bid for the hotel, within a one week period, ranged from mostly $55/night to $65 per night with one outlier night at $235/night.

An interesting chart is Exhibit 8, which if I have interpreted correctly, indicates that about 1 in 25 Priceline winning bids represented a 90% discount on commonly published rates for the hotel. And about 5% only got a 20% discount on the going room rate.

The vast majority of bid winners receive less than a 50% discount on the regular room rates. About 60% of winning Priceline bids received a 28%-36% discount on the room rate. Technically, the Priceline slogan “Save Up to Half Off” appropriately represents the Priceline reality. The Cornell graph shows about 10% of bidders received between 67% and 90% off the regular room rate.

The last time I used Priceline was for a night in Washington D.C., June 2007. I ended up with the Marriott Key Bridge, Arlington, VA for about $100 and the lowest available room rate through the Marriott site was $329 for that night.

My initial analysis of the Priceline tool provided for hotel managers seems to indicate some trends for consumers.

Consumers may find the most favorable room rates booking Priceline the day before or day of arrival. Booking at 10 to 14 days in advance of arrival may also provide the best opportunity for higher discounts. The Cornell Priceline tool appears to encourage hotels to not discount Priceline inventory rooms as deeply between 2 and 10days before arrival as a means to maximize profits.

An interesting analysis would be to compare the Cornell Priceline data with consumer bidding data from www.biddingfortravel.com to see if there is useful consumer information to be gleamed from the comparison.

Anyone planning to make a hotel bid through Priceline.com or Hotwire.com should check out www.biddingfortravel.com to see what successful bids are pricing out and then try and use that data with the knowledge that 10-14 days before arrival may provide the best opportunity for deep discounts on Priceline. And if you are desperate and lucky, the day before and day of arrival Priceline bids may save you enough cash to buy gas and pay for hotel parking.

The PointsWizard blog on BoardingArea.com had a link to this article detailing strategies for successful Priceline bidding.

Laurence Geller listed some interesting data points in a blog from Jan 18, 2008. His piece discusses the widening divide between Generations X and Y mass consumers and the truly “super-affluent”. In 2006, the affluent spent on average $2,400 on hotels and resorts, while the super-affluent spent $61,200. He argues new brands will proliferate as today’s luxury brands become commonplace.

St. Regis Hotels are luxury brand of Starwood Hotels and Resorts

Friday morning on CNBC, a news crew reported from the St. Regis Fort Lauderdale, Florida from a CEO conference. The studio reporters were asking about the age of the hotel and the reporter stated it had been open 9 months. I haven’t looked into those facts.

The report got me to thinking about the super-affluent and the merely affluent. For the Loyalty Traveler the travel is reduced to the numbers. I wondered what the rates are at the Fort Lauderdale St. Regis.

Here are the search results for St. Regis, FLL room rates for Monday, 2-18-08

OceanView
$476.10 (AAA rate)
$479 (Best Available on StarwoodHotels.com)
$509 Special Offer Page “SRSPG”
$529 (Best Available on SPG.com)
$549 Special Offer AAA rate “XRF”

Ocean Front
$566.10 (AAA)
$579 (Best Available on StarwoodHotels.com and SPG.com)
$609 Special Offer “SRSPG”
$649 Special Offer AAA rate “XRF”

Pool Terrace
$607 Florida Resident rate
$669 Best Benefits Package special offer “SRSPG”
$689 (Best Available on StarwoodHotels.com and SPG.com)
$709 Pool Terrace Special Offer AAA rate

[special offers accessed from St. Regis Fort Lauderdale ]  [Loyalty Traveler note:  St. Regis converted to a Ritz-Carlton in summer 2008 a few months after this post]

XRF rate includes complimentary valet parking, two Bloody Mary’s, and complimentary room upgrade to next available room type. In this case, contact hotel and find out a good night for booking with a good upgrade potential.

SRSPG rate includes two Bloody Mary’s, triple Starpoints and complimentary internet access.

The super-affluent spender could be looking at about 2 to 3 months of Pool Terrace living over the course of a year at this hotel and comparable properties. The affluent spender on $2,400 is looking at a long President’s weekend holiday and sitting home the rest of the year.

Starwood Cash & Points Award Savings

While checking St. Regis Fort Lauderdale, I came across an example of where loyalty program membership leads you to a much better booking option than a regular search on the hotel chain primary web site.

Westin Colonnade, Coral Gables, FL
Saturday, Feb 16, 2007
Rate = $429/night

www.starwoodhotels.com web site hotel rate for the Westin Colonnade through a regular search as a hotel guest not participating in Starwood Preferred Guest and not looking for the Starwood Preferred Guest hotel loyalty program site.

Checking http://www.spg.com/ – I have the option of getting a Cash & Points award at the Westin Colonnade, a Category 4 SPG Hotel for $60 and 4,000 Starpoints.

The ability to buy up to 20,000 Starpoints online from SPG at the rate of $35/1,000 points is a strategy to keep in mind if you do not have 4,000 Starpoints. Adding the cost to buy 4,000 Starpoints for $140 and the $60 Cash portion of a Cash & Points award makes a $200 room rate booking possible. The website states purchased Starpoints will be posted to your account within 24 hours.

The corporate-branded hotel websites generally have the lowest rates for their own hotel rooms compared to third-party online travel agencies like Expedia and Travelocity.

The difficulty for the DIY online hotel reservationist, is the time needed to sift through thousands of pages on the corporate-branded websites to find the lowest rate page. Finding the lowest rate is a matter of knowledge and luck at the time you search.

$485 through Starwood Hotels corporate web site compared to $200 for the SPG member using Cash & Points booking option for a one-night rate at the Westin Colonnade is the differential cost for the guest with a lack of knowledge and time. The Starwood Preferred Guest loyalty program gives the member a hotel rate option that is nearly $300 less.

An additional benefit of a Cash & Points stay is the award stay usually does not incur tax. The minor detraction of a Cash & Points award is the hotel stay does not count for elite qualification or promotional offer credit. A Cash & Points award stay also does not earn points for the Cash portion of the award.

Priceline Hotel Bookings

CNBC reported Friday morning Priceline has experienced a surge in bookings. The TV commentator asked, “Does the growth in Priceline indicate a weak economy?”

Priceline is a great resource when hotel room rates are threatening to make your credit card bleed. Last June, I booked the Marriott Key Bridge in Arlington, Virginia for a Sunday night before a Monday afternoon flight to Buenos Aires. I wanted to be in DC, but the major loyalty program hotel rates ranged from $250 to $350/night. I considered renting a car and driving to the Virginia outer suburbs for a $100/night Sheraton rate.

Marriott Key Bridge Hotel, Arlington, Virginia (Priceline.com booking $115)

Instead I paid $115 total for the Marriott and I was a ten minute walk across the bridge into Georgetown. I had an interior pool view room on the third floor while the preferred rooms look out over DC from 6 to 10 stories up.