How does hotel pricing work?

[Chino]

I just booked a night in NYC for late November. On the hotel's Website, the cheapest I could get a room for was $261, but on Traveluro, I got the same exact room for $125 (I just can't cancel it if I need to). How does that work? How does a third part offer a room for half of what the hotel itself charges?

[King Postwhore]

Brian, It may say the lower price but click on it like you are going to reserve to verify the cost.  I bet it's closer to the higher cost.

[El Barto]

I can't answer your question, but I can say that Travluro seems to be somewhat dodgy. I actually used them last month and it worked fine, but I wasn't really sure I'd have a room waiting for me when I got there. A lot of other people have run into problems with them, though. I'm not sure, but I think they advertise rates that they may or may not be able to secure.

With hotels their own base rate is usually more expensive than the booking agencies. Certainly Expedia, Travelocity, and the like all get favorable rates. That makes perfect sense. One thing I can see now is that you're booking six weeks out, and the hotel is probably keeping their most expensive rates on their site for corporate clients. They'll drop them once the date gets closer and they know what their capacity will look like. If you check that same hotel for, say, next Tuesday, you might find rates more in line with Expedia.

[Chino]

Brian, It may say the lower price but click on it like you are going to reserve to verify the cost.  I bet it's closer to the higher cost.

It was the advertised cost of $125, plus tax. I booked it and was charged the price they claimed.

[Lonk]

Yeah, ElBarto has a point that the hotel's website will have inflated (actual?) priced for corporate clients. The hotels usually make predictions of how many available rooms they will have for certain dates, and release "discounted" price for third party booking agencies for those dates. At least that's what I heard about Priceline, Hotels and Expedia.

[El Barto]

Brian, It may say the lower price but click on it like you are going to reserve to verify the cost.  I bet it's closer to the higher cost.

It was the advertised cost of $125, plus tax. I booked it and was charged the price they claimed.

My recollection is that it shows pending until it changes to confirmed. Keep an eye out for that, because they don't email you or anything.

[Chino]

I can't answer your question, but I can say that Travluro seems to be somewhat dodgy. I actually used them last month and it worked fine, but I wasn't really sure I'd have a room waiting for me when I got there. A lot of other people have run into problems with them, though. I'm not sure, but I think they advertise rates that they may or may not be able to secure.

With hotels their own base rate is usually more expensive than the booking agencies. Certainly Expedia, Travelocity, and the like all get favorable rates. That makes perfect sense. One thing I can see now is that you're booking six weeks out, and the hotel is probably keeping their most expensive rates on their site for corporate clients. They'll drop them once the date gets closer and they know what their capacity will look like. If you check that same hotel for, say, next Tuesday, you might find rates more in line with Expedia.

Funny you mention that. I just spent 4 nights in Cape Cod last weekend. I bought the room two months ago through the hotel to the tune of $700ish. The week before our stay, I looked up the same rooms for the same timeframe, and it was $1250.
 
I'm wondering if two months ago Delta had impacted reservations and had hotels kind of scared. The hotel was empty though, by my estimates, less than 15% of the rooms were occupied. I was surprised they were still charging so much so late in the season.

[El Barto]

I can't answer your question, but I can say that Travluro seems to be somewhat dodgy. I actually used them last month and it worked fine, but I wasn't really sure I'd have a room waiting for me when I got there. A lot of other people have run into problems with them, though. I'm not sure, but I think they advertise rates that they may or may not be able to secure.

With hotels their own base rate is usually more expensive than the booking agencies. Certainly Expedia, Travelocity, and the like all get favorable rates. That makes perfect sense. One thing I can see now is that you're booking six weeks out, and the hotel is probably keeping their most expensive rates on their site for corporate clients. They'll drop them once the date gets closer and they know what their capacity will look like. If you check that same hotel for, say, next Tuesday, you might find rates more in line with Expedia.

Funny you mention that. I just spent 4 nights in Cape Cod last weekend. I bought the room two months ago through the hotel to the tune of $700ish. The week before our stay, I looked up the same rooms for the same timeframe, and it was $1250.
 

That's strange. If they were expecting to be full then I could understand it. If it was nearly empty then they majorly screwed up.

I'm wondering if two months ago Delta had impacted reservations and had hotels kind of scared. The hotel was empty though, by my estimates, less than 15% of the rooms were occupied. I was surprised they were still charging so much so late in the season.

It's certainly hitting the airlines pretty hard. Air travel is as cheap as I've ever seen it. I shelled out $170 for R/T DFW-LGA, and I honestly overpaid quite a bit. That was to get the two flights I wanted. I could have booked it for $97 if I wanted different flights, which were still very good. And this is on AA, BTW. My trip to SoCal set be back $103/RT, and those were excellent flights.

Rental cars are stupidly expensive right now. The companies sold off half their fleets to stay afloat through last year, and are having a hard time buying them back. The reason I'm flying to LGA and not someplace more convenient is because the cars were half what they were anyplace else. Hotels seem to be priced exactly as they were 2 years ago. I've seen no difference at all.

I did notice that they were largely vacant, too. For that reason I'm probably only booking two nights before I fly out. I'll be picking my hotels day to day as I travel.

[ReaperKK]

Oh man a question I/ feel like I'm qualified to answer.

When I ran a hotel we had a base room rate, this was the room rate that was calculated out to cover the cost of the hotel room. Everything was built off the base rate and we would build packages around the time of year, expected occupancy, frequency of stay, rewards, travel agency bookings, etc.

For example, a small studio room at my old place was $159 a night during the month of April (April being one of the busiest months). If you were a booking the room for a week or more we'd offer a discount, if you booked through expedia you might pay $179 a night (we would inflate the price to cover the overhead expedia would charge us), or if it's the day of and we still have the room vacant at say 7pm we'll toss it on hotelstonight for $99 a night. We kept a ton of metrics and would adjust price accordingly. We'd also do pre-pay rooms at a discount for our off season, people would pay and get say 30% off for a room in October (our slowest month) but it wasn't refundable for any reason.

Long story short with so many booking sites, travel agents, and discounts offered by the hotel prices can vary wildly on rooms. Additionally if your room inventory management system isn't tied into 3rd party travel sites pricing can sometimes lag behind what the hotel wants to charge.

[cramx3]

One other thing to note, if you book with the discount sites you don't get the rewards.  So for me, I am an IHG member at the highest tier from work travel.  For me to get IHG points, I need to pay their rates from the website.  When I booked via a discount site before I only got the small 500 points for a stay, not the full 3kish points for the room I'd normally get. 

Funny though, I use a travel agency for booking work travel and the IHG hotels are always more expensive there than if I were to just book it directly, but I'm not allowed to.  I still get my points though because you are paying the full rate.

Also the non refundable part usually makes it a bit cheaper too, and I'm really not a fan of booking non refundable rooms.

[Stadler]

I can't answer your question, but I can say that Travluro seems to be somewhat dodgy. I actually used them last month and it worked fine, but I wasn't really sure I'd have a room waiting for me when I got there. A lot of other people have run into problems with them, though. I'm not sure, but I think they advertise rates that they may or may not be able to secure.

With hotels their own base rate is usually more expensive than the booking agencies. Certainly Expedia, Travelocity, and the like all get favorable rates. That makes perfect sense. One thing I can see now is that you're booking six weeks out, and the hotel is probably keeping their most expensive rates on their site for corporate clients. They'll drop them once the date gets closer and they know what their capacity will look like. If you check that same hotel for, say, next Tuesday, you might find rates more in line with Expedia.

The base rate is the "rack rate", before any promotions, discounts or whatever.   Each of the agencies get a block of rooms, or at least get restricted access, since they sell out before the hotel ACTUALLY sells out.

Bart is also right about corporate clients. Whether they negotiate directly with the company - like GE - or through an agent - many companies without scale use entities like Carson Wagonlit - they usually get rates and availability that is slightly better than the average Joe.  Though, also like Bart said, as they get closer, they are not going to have an empty hotel just as a sop to a corporate client.  They're going to lower their rates fill the building.  I just booked a couple days in Ft. Myers, Florida for next week at short notice, and the Orbitz, Carson Wagonlit (my company's travel provider) and the hotel brand itself were all within a dollar or two of each other (and I didn't pay attention to the "special rates" like AAA, AARP; if I did, I imagine they were the same).