Striking hotel bargains

Discount: `Opaque' sites' low prices for high-end rooms are finding favor with business travelers.

January 08, 2004|By Jane L. Levere | Jane L. Levere,NEW YORK TIMES NEWS SERVICE

Terrell B. Jones, the founder and former chief executive officer of Travelocity, usually books hotel rooms on Priceline.com for his business trips to New York. He has used the service six times since he left Travelocity in May 2002, paying about $120 a night to stay at the Melrose, the Roosevelt, the Hilton and the Grand Hyatt and $150 at the Waldorf-Astoria, not including taxes or service charges.

Jones is one of a growing number of business travelers who reserve rooms on Priceline and its smaller rival, Hotwire.com, despite the complexity of the transactions and the restrictions they carry on hotel-loyalty program benefits.

"I use Priceline because I know I can get an excellent price within a quality range I like in roughly the geographic area I want to be in," he said. "And if I'm calling on customers, which I do in New York, it's my nickel."

Both Priceline and Hotwire operate what are called "opaque" Web sites, where travelers do not know which hotel they are booking until they have paid for it. This feature encourages chains to give the Web sites access to rooms; they think they are not undercutting their brand or hurting their rate structure if their identity is secret until the purchase is made.

Priceline offers rates at more than 10,000 hotels around the world that it says are 40 percent cheaper on average than the lowest rates on sites like Travelocity. com, Expedia.com and Hotels. com. Hotwire says its discounts, at 7,000 hotels in North America, are 45 percent lower on average than the best published rates.

Under Priceline's system, travelers choose a neighborhood in a city and specify a hotel rating category, the number of stars they prefer, and then make a bid. If Priceline accepts the bid, it makes the booking, which cannot be changed or canceled. If it rejects it, travelers must submit a new bid.

Hotwire shows travelers rates of unidentified hotels in various neighborhoods and star categories; it, too, forbids changes or cancellations once a selection is made.

The two sites' popularity with business travelers is growing along with that of other online travel companies. A 2002 study by Forrester Research showed that 14.2 percent of those who took 20 or more business trips a year used Priceline, up from 12.7 percent in the previous year's survey. The same study found that 3.4 percent booked through Hotwire, up from 2 percent; 15.6 percent used Travelocity, up from 13.6 percent; and 14.1 percent made their reservations through Expedia, up from 11.8 percent.

"Priceline and Hotwire are the dirty little secret of business travel," said Henry Harteveldt, principal analyst at Forrester. "Smart business travelers trying to save money use them for hotels, especially in a recessionary environment and particularly if they do not have a corporate travel manager. You would think frequent travelers would be more likely to belong to hotel loyalty programs and that points would matter to them, but for a good number of road warriors, saving money on hotels remains paramount."

For others, it is not, said Josh Feuerstein, vice president for hotels at Travelocity. "Because a purchase on Priceline and Hotwire is nonrefundable," he said, "they are likely to scare away all but the most price-sensitive business traveler. A lot of business travelers want to know exactly where they're sleeping and what their room looks like. With Travelocity, they know."

Before booking on Priceline or Hotwire, devotees recommend reviewing the rates listed on the sites of hotel chains as well as the ones on Travelocity, Expedia, Orbitz and Hotels.com. They also suggest checking with people who have used the services and consumer forums like FlyerTalk.com, BetterBidding.com and BiddingForTravel.com.

They also like to boast about the deals they got. For example, Jeff McKinnon, a former Air Canada executive who now studies computer science in Halifax, Nova Scotia, got rooms at the Marriott in Dayton, Ohio, twice last January for less than $35 a night - one-third of the $105 he paid at the same hotel a month earlier for a room that he booked on Marriott's Web site.

Randolph Mah, an engineering manager in Sacramento, Calif., has used Priceline about 20 times in the past year to book rooms. A diamond-level participant in Hyatt's loyalty program, he has tried to bid on the chain's hotels to maintain his elite status. Last year he paid $52 a night to stay at the Hyatt Regency in Washington, which he said was less than half what the hotel was asking, and he stayed at the Hyatt Regency San Francisco for $60, when the hotel's rate was $189.

The sites have disadvantages. Priceline's booking process can be time-consuming, and bids are not always successful. Reservations must be paid for in advance, and "if your plans change, you're in trouble," said Thom Nulty, a corporate travel consultant. "I wait to book until I'm 100 percent sure my meeting is going to happen."

Many hotel companies say they do not provide loyalty program benefits, like credits for room nights, points for dollars spent, or amenities like free breakfast or the use of concierge floors, to program participants who book through Priceline and Hotwire.

However, these restrictions seem to be applied inconsistently, said Ken Leiter, a marketing executive in Secaucus, N.J., who is a Priceline customer and an elite-level Starwood, Hyatt and Hilton loyalty program participant.

"I usually don't get credit for my stays," Leiter said. "Starwood does give other benefits, like room upgrades and concierge-floor access, but this will stop on Jan. 1. Hyatt gives benefits like upgrades and free breakfasts now but didn't before, and Hilton doesn't officially, though some of their hotels do."

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