Just used priceline for the first time and was hoping for some help.

I bid $110/night at a resort in Arizona and I called the hotel chain (Loews) to confirm. The person who I spoke with had the rate at $95/night.

Does this make sense? I figure maybe the difference is what priceline takes but I'm not sure.

Any other priceline experts?

Was your bid accepted at $110?, and they are showing that your room rate is $95? Or, do they have a room available for $95. If they are "showing" the rate @ $95, then that is what priceline paid for the room. If they have the room available for $95, priceline has a guarantee that you don't pay more than what the hotel is offering, so in other words, if they have a room available for $95, then priceline needs to refund you the $15 difference.
Does this make sense?

It's really important (a) to know what the target hotels' best rates are for the nights you're staying, not just in general, since hotels will change room rates all the time; and (b) to use www.biddingfortravel.com to see what other Priceline bidders have paid for comparable places recently. You can't specify which hotel you'll get, but as you can see from BFT's hotel lists, it would be one of two at the "resort" level in Tucson.

It looks like Lowes in Tucson regularly goes for between $75 and $100 a night. That usually means PL is paying close to that themselves, albeit less (of course.) Therefore PL probably paid the hotel something like $70-$75 in your case, and kept the rest as profit. Priceline's shareholders thank you.

I don't think the hotel has any idea what you paid Priceline for the room. They only know what Priceline is paying *them* for the room, in this case $95/night. But, the agent at Loews wasn't supposed to tell you that.

As I understand it, Priceline may have different room rates for the same hotel the same night, so it's possible you could have bid even lower than $95 and had your bid accepted, and they would have sold you a room at a different internal rate. Maybe they only have a few rooms in the $70-$75 range but know those will sell the easiest, but the $95 rooms would sell first if someone bids that high.

But $95 may have indeed been their cheapest rate that night (as of now) if the hotel was very busy or rates were higher than average for that period.

Andrew

Priceline used to list taxes and fees separately. Then you knew how much Priceline paid for the hotel by calculating from the hotel tax rate for the city.

I'm getting confused by these posts. Are people telling me that Priceline actually sells the rooms at the exact cost they pay? How do they make money and stay in business?
I always figured they got rooms at a certain price and then sold them on bids for maybe 10% minimum higher than they pay. Is that wrong?

yawn_boring: what gardyloo said is correct.

biddingfortravel.com

Patrick
Priceline makes money off of the fees as well.

PL makes money off of fees and off the differential between what you pay PL and what PL pays the hotel (chain). If you bid over what PL has to pay the hotel (sometimes in the past you could compute this by backing out the taxes) you'll get the room. If your bid is only $1 over PL's price, you'll get it. PL's fee is then added, so there's no way they don't end up net ahead. But if you bid $20 over what PL paid for the room, that's $20 additional profit they've made. If there are two hotels offering rooms to PL in the same category/zone, PL will buy the cheapest room regardless of what you've bid, so there's no benefit in bidding more than the minimum (based hopefully on Biddingfortravel.com results) thinking you'll get a more desireable place, because you'll get the cheaper room anyway.

Thanks for all the replies.

I did read biddingfortravel.com before making a bid on priceline. since it's Easter week I went with a "high" bid of $110 and it was accepted. That's why I was surprised when the rep from Loews said "I see you're booked for $95/night." Maybe the difference is the taxes but I'm still not sure. Maybe Priceline takes the difference of $15/night like Patrick said? If not, should I try to make a case with Priceline?

I'm not complaining about the rate. The lowest Loews or Expedia, Travelocity, etc. had for these nights was $195.

gardyloo...a couple of minor points. If you bid the exact rate PCLN pays the hotel too, (not just "a dollar over" as indicated in your post) you'll still get the hotel, but PCLN is out $1 of profit. Now they only earn something through their fee. eg, hotel will accept 75, that is your bid, you'll get the hotel, but PCLN gets only the fee.

2nd point is, if there are several hotels in the same zone, same star level you bid, and your bid would qualify you for more than one of them, there is some sort of rotation system, whose operation I'm not versed in, which determines which hotel you will get. So, if you bid the same 75, and there are say 4 hotels in the same zone with same *s who will accept that $75 (one may accept 68 or more, another 70 or more, another 72 or more, another 75 or whatever the figures are) you would get any one of those 4 depending on whose turn it was in the rotation.

In Yawn_boring's case, PCLN took the $15 difference. So...you could have gotten it for $15 less, but in the scheme of things, at least the way I think, $15 is pretty insignificant and you got a good deal. Don't worry about it. Sometimes fighting for pennies less just isn't worth the hassle it takes to get it IMHO!!

No you're right Olive Oyl, although I haven't heard that PL has some sort of rotation system; just lowest price to be paid by PL in a given zone/rating category wins. But you're probably right in case of ties. If it were revealed that PL favors one chain or hotel in a given zone over another, that would be a disincentive for listing through PL in lieu of Hotwire or Hotels.com.

In fact there were recorded cases on BFT where PL paid more for the room than the winning bid, as evidenced by the tax computation. I'm sure that's no longer the case now that PL is masking the taxes with their mysterious fee structure.

Just to confirm what I think this post has discovered ...

if you bid higher on PL than what you should have, and the hotel accepts the offer from PL, then Priceline pockets the difference btwn your offer and the hotel's lowest rate.

Like I said earlier, I'm not unhappy with the rate, but I didn't realize that's the way PL operates.

OliveOyl, thanks for the clear description of the Priceline pricing structure.

For some reason, I had always assumed Priceline would have a profit built in to the rate they'll accept. For example, in the case here, if Priceline had to pay $95 to the hotel then the minimum Priceline would accept would be $100 say.

Yawn_boring, The hotel has a certain amount of inventory they allot to PCLN if they are in a slack period. If bookings are good, (and this is computerized and can look out months in advance, weighing all sorts of variables...season, citywides, etc) PCLN may get no rooms at all or very few, which is happily occurring more and more often (for us anyway) in this recovering economy. It isn't a case of a hotel accepting an offer from PCLN--instead, they tell PCLN, you can have x# of rooms on this date and our minimum acceptable is x. Either the minimum is met or the rooms go unsold, and it's no skin off anyone's back if they are unsold. There's a point below which it just isn't worth it for the hotel to accept less.

Dave...the premise was that although some people might hit the bottom figure on the nose, there would be many, many more who would bid more than necessary, which would have made PCLN very profitable. Then along came websites designed to spell out what the bottom figure was, which certainly put a dent in PCLNs profitability, cutting it to the bone in those cases. There really isn't anything that can be done about it. It has no impact on the hotels' pricing, but it has impacted PCLNs bottom line.

Although born in a struggling economy, my thinking is that now there will always be a place for PCLN, but the supply will/has shrunk and in many cases I follow, the bottom dollar has risen, making the risk involved in blind bidding less palatable. There are still bargains, but in decent markets, they aren't as frequent or as deep. For the most part, our hotel is no longer available to PCLN on weekdays. It's a happy time, and after 3 grim years, about time!!

OliveOyl, does your hotel find Priceline customers to be more or less demanding than average? Is there any policy to give them worse rooms?