Priceless Priceline

USA Today has a story headlined “Here’s how to get a 4-star hotel at a low-star price”. Laura Bly of USA Today notes that she has “landed other noteworthy bargains through Priceline, most recently in budget-busting New York. For a stay earlier this month, I started bidding at $120 for a four-star hotel in Midtown Manhattan, worked up to $170 and wound up at the Grand Hyatt, where the cheapest rate on Hyatt’s website averaged $366 a night. Total savings for three nights, including taxes and fees: $568″.

Obtaining that massive discount on Priceline requires a fair of amount of patience and fortitude owing to the company’s policy of having an “opaque” inventory of chain lodgings whose identities and exact locations aren’t revealed to customers until they’ve committed to a non-refundable purchase that includes taxes and Priceline fee”. Even Priceline’s spokesman says that “most “name your own price” customers shop for retail hotel rates on Priceline or competing sites, then bid 50% less”. Some veterans of the process consider it a “science” that requires seeking out previous winning bids in conjunction with rates prevailing in the market failing which customers could actually end up paying more.

With the chorus of voices predicting a recession this year or early next year, websites such as Priceline should see even greater traffic as customers balk at rising hotel rates, a factor in the inflation calculus of the Federal Reserve. However, the success of Priceline’s model does depend on hotels dumping “distressed” inventory into these distribution channels and if pricing expectations drift downwards the incentive to offer a significant portion of the inventory in an anonymous fire-sale drops. Other aggregators such as Kayak and Farecompare however are likely to fare better as hotels step up their rate wars in an adverse economic climate that is, hopefully, of a relatively short duration.

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Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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