Because, aviously…

Disclaimer: This is not just limited to Priceline/Expedia/Kayak/etc and likely applies to all travel sites, but a little look behind the curtains of how these companies get you the cheapest rates in town.

When you go to book your hotel, some people are smart and shop around before booking.
If you don’t try too hard and are looking for cheaper rates, sometimes it is as simple as “Paying in advance” and they give you a better rate (I’m looking at you Days Inn).
But often enough you’ll look at a site and see one price, and then head over to Expedia (for example) and see an even cheaper rate.

For the topic of this conversation, let’s focus on Country Inn & Suites in Camp Springs, MD.
If I go to book a night via their website for tonight, I can get a King Size bed for $126.

But if I head over to Priceline, and browse through their Priceline Express deals, I can get that exact same room for $95.
<Priceline Express does not tell you what hotel or room you are getting, but I did a little work for this, and am certain they are the same room>

So how does Priceline get away with the cheaper pricing?

The websites go out and buy rooms at wholesale rates, and then turn it around and mark it up a few dollars and sell it to you.

So why can’t you and I go out and buy at wholesale? Well…we probably could if we bought enough rooms (hence hotel rewards programs).
A site like Expedia or Priceline goes to a hotel and buys the same room every night for a year. With the guarantee of 365 days of business, and it’s likely that not all of them will be used (free $$ since housekeeping is not needed in that case), the hotel is able to give them a better rate.

They then turn it around and sell it at a markup, with likely higher markups around special events, holidays, and other times that the rooms are in higher demand, yet still cheaper than what the hotel will give you.

The hotel gets their money regardless, the website makes a few dollars, you save a few dollars, and everyone is happy.

Happy hunting and safe travels!

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One thought on “The Secret to Online Hotel Pricing

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