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Hotel Pricing: Obtaining the Right Rate

Who gets a discount?
You may qualify for special rates at selected hotels (subject to availability). Here are some of the most common.

  • AARP/Senior-citizen Members of the American Association of Retired Persons (you must be 50 or older) at some hotels; any senior at others, with minimum qualifying ages ranging from 60 to 65.
  • Military/Government Active-duty military personnel and employees of federal, state, and local governments with ID; government contractors qualify at some hotels.
  • Teacher/Student Full-time teachers or students.
  • Travel-industry Travel agents, airline employees, and other industry employees.
  • AAA Members of the American Automobile Association.
  • Shareholder Those who own stock in the hotel's parent company.
  • Corporate Some companies arrange for reduced hotel rates (there are unscrupulous people who claim to work for or to do business with a local company, since hotels rarely ask for ID).
  • Family-plan Usually depends on the age of the children -- under 12 for some, 18 for others.
  • Frequent-guest Many chains offer the chance to accrue points for free nights.
  • Credit card Some credit card companies run promotions providing a discount if you pay with their card.

Testing a popular travel club
For $59.95 a year, Travelers Advantage promises discounts of up to 50 percent at member hotels. Although the company claims to work with 4,000 properties, the selection is less than overwhelming (for example, there is only one in Seattle -- Executive Inn Express, a budget hotel). Other problems: There are numerous blackout periods, and hotels can refuse you if they're more than 80 percent full.

We decided to give it a try anyway. First we called the Beverly Hills Plaza and learned we could get a $160 room for $80, already saving more than the price of joining. Sounds good. When Le Meridien in New Orleans offered a deluxe room at half off the $300 rack rate, we thought the club might be worth the trouble. Then Le Meridien told us we'd have to wait four months. In the meantime, the hotel was offering the same room for $189 and a smaller one for $169. In New York, Travelers Advantage advertised a discount of up to 30 percent at the Waldorf-Astoria. "The hotel does not participate in the program," asserted the Waldorf. We tried the Millennium Hilton and heard the same thing. Travelers Advantage said that individual hotel managers don't know about the deal they've cut with Hilton. Anyway, the rates Travelers Advantage said it had negotiated were virtually the same as the hotels': $199 versus the Waldorf's $209; $135 versus Hilton's $149. It sounds like a club we'd rather not join.

Priceline: at what cost?
Priceline.com's choose-your-own-rate system works like this: You pick the city, dates of travel, and quality of hotel, from one to five stars (the ratings are set by Priceline). Then you type in how much you want to pay. After entering your credit card information, you wait for a reply by E-mail, which usually comes within the hour, telling you if your bid has been accepted. Bids can also be made via an 800 number.

The main drawback is that you have no idea which hotel you'll end up with. And once a bid has been accepted, you can't back out -- if you don't like the hotel, or if something comes up and you can't make it, too bad. Also annoying: If Priceline doesn't accept your bid, you can't go back and make a higher one. You have to change another criterion besides the price (the dates, the city, or the quality of the hotel).

That said, we bid $120 for a three-star hotel in New York City and landed a night at the Sheraton Manhattan. The best we could get by calling the hotel directly was $259.

How does Priceline do it?"Hotels specify the rates they'll accept," says spokesperson Brian Ek. "While the prices are low compared to the rack rates, they're significantly above the hotel's cost. When you put in a bid, we try to find a hotel for less than you offered and make the spread. If you put in $120, we try to find a hotel that put in $110."

A sales manager at a major hotel who asked not to be identified had another explanation: "People tend to type in $90 to $120 when they're asked what they want to pay, but hotels sell rooms to Priceline for $140 to $160," she said. "Priceline has been subsidizing the difference, because the more bookings it gets, the more the stock price goes up."

Priceline would not confirm this. But if it's true that the company is paying more attention to the stock price than the bottom line, the bargains may dry up some day. Until then it's one of the best deals around.


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