Here are this month’s nominations:

Justin Meyer, Kansas City International Airport

Kansas understands the power of using social media for driving business goals, be it to launch a new route on Alaska Airlines from MCI to Seattle, WA.  The airport had a pre-existing relationship with the carrier, which led to a member of  the staff being invited to fly out on the inaugural flight and tweet about the new service and cool promotion they were running. Apart from this, they’re also very proactive in replying to customers online. Read more about their efforts here. (Note: Justin recently shifted to Tampa.)

Mandie Armstrong, London Gatwick Airport

At the most visceral level, Gatwick’s efforts on social media are striking because of their verve and innovativeness. They were the first airport to put up a large screen in the airport that shows a streaming feed of tweets to the airport and the airport’s responses. For this initiative, they were even judged the winners in the Airports category of last year’s SimpliFlying Social Media Awards. Their customer-service efforts on Twitter deserve to be replicated in airports worldwide.

Lisa Brown, Boston Logan International Airport

It might be fair to say that Boston Logan has been one of the pioneers in using social media to drive engagement with passengers. They were featured almost a year ago in our Top 10 Airports case-pack when airports were still figuring out how to best connect with travelers online and drive value from it. Boston Logan has pro-actively partnered with airlines flying there to drive mutually-beneficial social initiatives. And they are also popular among key influencers, since they like to send little gifts like a Boston Logan cap, to advocates.

Note: Voting closes in a week’s time on May 31 at 12 pm ET.

• The Best Airlines, Airports and Hotels in social media – finalists for SimpliFlying Awards for Excellence in Social Media
• 2nd Annual SimpliFlying Awards in Social Media Excellence – Nominations now open for airlines, airports and hotels
• 2nd Annual SimpliFlying Awards in Social Media Excellence – Vote NOW for best airlines, airports, hotels
• SimpliFlying wins the 2011 Gold Magellan Award for being the Best Online Travel Blog
• Airports That Twitter & Why It Is An Effective Tool (for the airport brand)

It seems many have watched the movie ‘Field of Dreams’ with Kevin Costner, and believe the infamous phrase ‘build it and they will come’. I guess it is time for a wake-up call, because we are not building a baseball field in the middle of a cornfield in the Midwest US for some deceased legendary baseball players. No we are in business ladies and gentlemen, and we have to make money.

Investors like to see an ROI on the capital they put into the project. The hotel has to generate income, and rather sooner than later. The sooner we start making revenue, the quicker we will be able to turn the business equity profitable.

Owners, investors and developers, please be advised! Guests will not come just because you are building a new hotel. They will not come because you have thought out an innovative lodging concept. No, we will need to work hard to attract them.

And moreover, we need to start in time …

So how long up front do we have to start with our marketing, PR and other strategies to attract guests? Let’s walk through some of the key points:

PR
Actually the promotion should start the day the first construction is initiated. Put up a big sign ‘Coming soon’ with some breathtaking images of what you are building to attract the attention of people walking and driving by. Make sure you change the information and images through the various stages of construction to keep people updated on your progress.

During construction all the way up to the opening is also a very easy time to create buzz with the press. Local and industry media is always curious about a new hotel opening, use it to your advantage.

You will have to do more than sending out basic press releases. Make sure your media package is intriguing and encompasses the true vision and mission statement of your hotel. Also invite the press to visit the construction site and model / demo room, and show them around. Get them excited about the project and share interesting anecdotes with them.

Social Media
FaceBook, Twitter, Pinterest, YouTube, Blogs etc are ideal social networks to get the word out there, even before the opening. Communicate the story of the hotel online and share the progress of the construction with potential future guests.

Connect with local people to have them help you spread the message. Just last week we had a blog article for our new hotel in Crete get 200 FaceBook likes within a few days time. And the hotel is still 2 months away from the opening date.

Foto websites like Flickr and Pinterest, but also the broadcast yourself video network YouTube are great to use when it comes to promoting your new hotel or resort. Images and short films are easily shared.

Show what people can expect in the new hotel, and don’t only focus on the rooms. Show some of the delicious dishes they will be able to enjoy in your restaurant or describe the favorite cocktail of your star bartender.

You can of course also provide information of fun things to do for tourists in your destination. Your hotel does not have to be open yet to position yourself as the local expert concierge.

Website
An important factor in the positioning of a website on Google, by far the most influential search engine, is age or history. Therefore it is to be recommended to launch a 1 page type of introduction website the day you have decided to start the hotel project. It should be even before you have the complete financing together. Really it can’t be early enough.

During the first phases of construction you can launch an under-construction/coming soon type of website explaining people what is to come.

In terms of launching true hotel website it is important to take into consideration that it takes time for the various pages of such site to be indexed in the different search engines (Google, Bing, Yahoo, etc). We recommend launching the site (with temporary images and content) 18 months prior, but certainly no later than 12 months prior to the opening.

SEO
The logic here is the same as with the hotel website, time is of the essence. And especially if you are located in a highly competitive market, don’t expect to just show up on the first pages of the search engines because you launched your website.

Search engine optimization is a lengthy and tedious process that should really start 12 months prior to the opening date of your hotel. Also sufficient budget has to be assigned. Many hoteliers think spending €500 per month in online marketing is enough. How much return do you think this will generate? If we are using a 5 to 1 ratio, this will bring in €2.500 per month.

Guess you will fall a bit short if your site needs to generate €/$ 25.000 per month. In general start working with an 8 to 1 ratio. So if you need to generate €/$ 100.000 in direct sales each month, budget about €/$ 12.500 per month in online marketing spending.

This will be needed for a lot of things like adding your website to hotel registry websites, putting press releases on online PR website, working with expert SEO companies, etc.

This should give you quite something to start thinking about if you are considering opening a new hotel. In our next article on this topic we will dive into the revenue management and distribution side of the pre-opening phase.

Cheers,

Patrick Landman @ Xotels

To learn more about our services click here: hotel pre-opening support

——

A year ago, the mobile photo social network Instagram had less than ten million users.  Yet it was growing faster than Facebook or Twitter were at comparable periods.

As a result, it attracted a fair amount of attention, and a few early adopter airline brands signed up, recognising the obvious link between travel and people taking and sharing pictures with their mobile phones. Fast-forward and the now Facebook-owned network has over fifty million users.   However, most airlines still don’t have a presence and many that do are using it sporadically and inconsistently.

We scanned through Instagram to look for 20 airline feeds so we could put together a comparative report.  In fact, even coming up with 20 airlines on Instagram wasn’t as straight-forward as we thought, as a number of major players are notable by their absence.

The infographic we’ve commissioned (see below) shows Air Asia leads in followers, bmibaby on activity and British Airways in likes.  It also throws up a few questions about how most airlines use Instagram and how they could use it more effectively.

To take a few feeds as examples:

• British Airways (@british_airways).   BA recently generated a fair amount of excitement on Instagram due to showing off the 787 Dreamliner.  In general, it uses it as a visual news feed.  Events, staff, planes, souvenirs and so on, which seems to be well received. The average number of likes is very high (an average of 250+ per post for the last ten), despite the feed having posted a little over 50x.  Clearly this is something BA could take advantage of, and make more of.
• Air Asia (@airasia) seems to use Instagram to try and get across the essence of the brand, via shots of the people who work there, including Airline boss Tony Fernandes.  It works – their Instagram account is very large (almost 15,000 followers) and they are extensively posted about on the network.
• Air France (@airfrance).  Air France’s Instagram account is a mix of everything – new routes, retro gear and destination pics.   At the end of last year, Air France also ran a #spotairfrance competition in the UK, France and Switzerland.   This was a competition for people to upload posts of their Air France experience, and tag them #spotairfrance. With 377 posts being submitted around the competition, Air France is still one of the few airlines to have used Instagram to encourage actual interaction from its followers via a competition or promotion.
• American Airlines (@americanair).   American Airlines posted sporadically until earlier this year, when it started uploading pictures of its new seats.   Since 7 March the feed has been quiet though.   Has there really been nothing to say at an airline as large as American for two months?

You’d be hard pressed to find Lufthansa, Alitalia or Iberia on Instagram, but you can find Russian airline Aeroflot (@aeroflot).  By and large the feed is made up of plane shots, but the fact that it posts fairly consistently already puts Aeroflot ahead of most other airlines on Instagram, and it deserves more than its 87 followers.

At Rabbit we’ve worked with both bmi and bmibaby, and this is what we did with their accounts:

We took on the bmi (@flybmi) feed earlier in the year with a brief to grow followers (at the time 200) and engagement and also to showcase destinations in line with the bmi Spring sale.   Edit challenges (take a master image and enhance it) are part of Instagram culture, and so we set up a weekly #bmieditchallenge around different destinations from Amman to Vienna.   We received almost 1000 posts in response, and grew the account five-fold to over 1000 followers.

bmibaby.  bmibaby may be the smallest airline on the list, but it is also the most active, having posted 228 times.

Our strategy was to use Instagram to showcase bmibaby destinations and also to build up relationships with influencers on the network.  As a result, we rolled out a six month campaign called My Europe, which resulted in over 35,000 destination photos being submitted, supplemented by Instagram inspired online destination guides and “insta-meets” (real world Instagram exchanges).

So what should airlines be doing?   A few things in particular:

1 – Make Instagram feeds dynamic rather than static.  With exceptions such as Air France, bmi and bmibaby, most airline Instagram feeds are one-way and don’t encourage fans to post their own images.   Encouraging engagement doesn’t always have to involve competitions or promotions.   A very simple thing airlines could do is to use the ‘repost’ function on Statigram (a web service linked to Instagram) to showcase a fan photo of the week – this is something we do for Gatwick Airport.

2 – Give the feed a theme.   What’s your Instagram feed for?   Most airline accounts are a mixed bagged and are a bit of everything.

Air Asia’s account works (and has amassed 15k followers) because a decision has clearly been taken to show the human side of the business – the staff.   Similarly, Aeroflot uses its feed to show off its planes and could probably quickly increase its following by tapping into the active ‘AV Geek’ community on social media.  Like with other social media channels, there needs to be a content strategy and plan.

3 – Look out for the quality of images. We noticed that a lot of airlines use their Instagram feeds a little like they would Twitpic – the photo service that allows you to attach images to tweets.   In fact, Instagram and other photo-sharing networks like Tadaa and Streamzoo have sold themselves on their in-app filters, which significantly enhance ordinary photos.   Again, a number of airlines seem to take care and attention with what they post, one example is SAS (@flysas)

4 – Be consistent.   Once you have created your Instagram account, have a content timetable and be consistent.   A few feeds we looked at had obviously created their Instagram account and then done nothing with it – in one high profile case since Christmas.   As with other social channels, you build engagement and follower by being visible and showing you are committed to the network and community.

The fact is Instagram and other up and coming photo sharing networks like Tadaa, Streamzoo and EyeEm can be powerful tools in an airline’s social media arsenal.   They can be very effective in sourcing good  user generated content, they can showcase destinations, they are good for visualising major news events and they are good for engaging a community that very often won’t be found on other social channels.

To end with, some more stats:  In the US and UK most mobile phones are now smartphones, with cameras as good as some entry level digital cameras.   In the USA, more smartphones (150 million) will sell than all cameras combined.   In the US, the % of pictures taken with a smartphone jumped from 17% in 2010 to 27% in 2011.   The most popular camera on Flickr has for a while now been the iPhone.   As an airline, your business is inherently visual.  Isn’t this a trend you should be taking advantage of?

• How BmiBaby Used Instagram to Visually Engage Travelers and Locals
• How airlines and airports can dramatically increase engagement on their Facebook Pages through one simple action
• Vote for the SimpliFlying Hero of April 2012: bmibaby vs JetBlue vs Virgin Atlantic
• What will bring Russian airline brands out of their slumber? In conversation with industry expert Stuart Barwood
• Airline brands must understand that social media is like a BBQ cookout party

I’m not a foodie. But I like food. I like cooking. I like to eat good food. I like authentic experiences. I like holes in the wall. I once drove 5 hours to eat deep fried cheese. And when I was in LA last month I drove an hour to visit the Kogi food truck (photo). But I don’t really watch food shows, read food blogs or base every restaurant I visit on reviews on Yelp or Tripadvisor.

I have friends for that.

My friend Stephanie is a foodie. She tries crazy recipes and knows about all the new and hot restaurants in town. And beyond. There aren’t a lot of cities I travel to where she doesn’t know of someplace amazing.

Stephanie is not a big food influencer. She doesn’t blog, doesn’t take photos of her food, she doesn’t pin food recipes. She does influence her friends though. In person or on Facebook. And if she recommends a restaurant, I’m going.

I’m not a foodie. But I’m influenced by one.

Stephanie in turn, is influenced by a host of people who share her obsession with food. She’s part of a passionate community of foodies. A lot of her friends are foodies, she watches Food TV, reads a lot of food blogs, is active on Chow and follows celebrity chefs on Twitter.

Stephanie is a foodie. She makes her decisions based on information from influencers in the foodie community.

The example above is the essence of modern tourism marketing. Restaurants will get people like me in the door because I’m influenced by a foodie, who in turn is influenced by leaders in the foodie community.

As a marketer, you need to approach this in reverse. Activate the influencers who connect with the passionate community, who in turn connect with consumers at large.

This works for any kind of niche. Hiking, skiing, modern art, theatre, gambling, roller coasters, etc. There are thousands of passionate communities and each community, large or small, has influencers. It’s just a matter of activating it.

As a tourism marketer you need to identify your niches and ensure the delivery of your experience is remarkable so people will recommend your destination or product. It will start a cascading effect that produces long term results.

Following the lead of airlines irrationally pricing airline seats, hotels embraced variable pricing and its promise of liberal price increases during high demand periods. Hotel revenue management became a high stakes game to optimize revenues.

photo credit: JasonTromm

Hotel revenue managers welcomed their new computer overlords - and then quickly started overriding the revenue management system pricing recommendations

Encountering wild price fluctuations, consumers began playing their own games to save money booking hotels. The ability to find discounts from rates offered by hotel websites alters consumer buying behavior – just ask the online travel agency community.

So what happens as a result of this gamification of the hotel booking process? Much more is involved than simply pitting two sides against each other in a tug-o-war over the contents of a hotel guest’s wallet.

Hoteliers learned that variable pricing was a double-edged sword – similar tactics could be used by competitors to undercut pricing and steal market share. The game became more complex than originally imagined.

Similarly, consumers faced with a daunting assortment of distribution channels, business models and promotional pitches had difficulty finding a reliable method to score big hotel discounts. The complexity of their game increased as well.

How to Save Money Booking Hotels
The approach detailed below has been used successfully for several years. Simply put, it involves bidding using Priceline‘s “Name Your Own Price” service while using Expedia sister brands Hotels.com to calculate an inital bid and Hotwire.com to set the maximum bid.

It is a relatively easy game for travelers to play, with only basic arithmetic skills and a bit of organization required. The hotel savings don’t require booking months in advance, waiting until the day of arrival, or involve buying flash sale coupons and hoping for open availability when travel needs arise.

Tragically for the hoteliers, there is no accretive demand generation, just a potential share shift between candidate properties. These savings do not inspire discretionary trips or stay extensions to take advantage of a great hotel deal. Rooms are booked into targeted destination neighborhoods only when a trip is required.

Plus, this game is not just for the leisure traveler – it also works well for the unmanaged business traveler. Worse yet for the hotelier, even formerly brand loyal guests will be tempted to become brand agnostic when consistently rewarded with discounts ranging from 33% to 67%.

I live a conflicted existence. My hotelier persona laments the slow hotel industry recovery following the 2008 global financial crisis and promotes the need for hotels to build differentiated brands and execute disciplined pricing strategies. However, I must sadly confess to my hotel industry friends that my personal consumer behavior is guilty of waging a deliberate assault on their average daily rates.

The rationalization for such treasonous behavior toward my hotel brethren is simple. I am playing a consumer game with a clear objective – pay the lowest possible amount for a good hotel in a good location. Publicly available tools are used in a manner that is consistent with their design and full endorsement of the intermediary website. The hoteliers deliberately make these rates available for sale, so they should have no gripe with me – The process does not violate any channel, access or opacity constraints.

Why Hotels Offer Irrationally Low Rates
Renting a hotel room is a perishable service whose value drops to zero once a particular night passes. Hotel cost structures tend toward fixed costs. Direct expenses related to renting an incremental hotel room are relatively low. Typical hotel variable costs, excluding overheads, range from $20.00 to $40.00 per hotel room night.

Ridiculously low hotel rates normally occur when:

• Senior management or ownership issue directives to price distressed inventory at arbitrary levels
• Revenue Managers fail to analyze competitive pricing initiatives through merchant, retail and opaque channels
• Profit projections only evaluate marginal costs and do not consider contribution to fixed overheads
• Hotels desperate to put heads in beds neglect the impact of guests that may negatively impact core market segments
• Assumptions that ancillary revenue capture will be comparable to other market segments
• The assumption guests staying at deeply discounted rates may be easily converted to regular customers at normal rate levels

As a result, there is a temptation to open distressed inventory distribution channels under the assumption one incremental dollar is better than nothing. Unfortunately, this behavior can cause substantial collateral damage – and not just to that hotel’s bottom line.

Lowering prices to attract customers from the competition may also attract guests from lower tier hotels that are not members of the hotel’s traditional competitive set. Impacted competitors may react and potentially start a race to the bottom to shift share. Price differentials get compressed between 4-star and 2-star hotels.

Comparing quality grade/price/review score differentials for New York City – Times Square hotels on Hotwire, one sees relatively normal splits six weeks before arrival:

• Stars – Rate/Review % Favorable
• 2-star – $159/80%
• 3-star – $223/65% (+$64)
• 4-star – $308/90% (+$85)
• 4.5-star – $359/95% (+$51)

However, this all changes with intense pricing compression one week prior to arrival during a high demand period:

• 2-star – $248/35%
• 3-star – $228/85% (-$20)
• 3.5-star – $236/65% (+$8)
• 4-star – $380/90% (+$144)
• 4.5-star – $282/95% (-$98)

One would expect the first set of rates to align well with guest budget and quality preference tiers – producing a logical shopping and purchase process (with perhaps some hesitation to book the 3-star property given its low 65% approval score.)

In the second example, the 2-star (apparently a low quality property) and 4-star hotel are clearly maximizing revenues during a high demand period and not focused on driving business from the opaque channel. The 3.5-star hotel appears to be drastically discounting, perhaps to counteract relatively low ratings. Based on this spread, it would be anticipated that the 3-star, and especially the 4.5-star hotel would capture the vast majority of bookings due to their steep discounting.

While radically low pricing signals profitability issues a hotel, they also represent buying opportunities for consumers.

How Priceline works – The Rules
Priceline patented its “reverse auction” model, so it is unique within the travel industry. “Name Your Own Price” hotel bookings require guests to blindly bid for a hotel by defining the dates of the stay, a desired neighborhood and quality (star) rating. Users must submit full credit card details before being able to bid. The name of the hotel is not revealed until after a bid is accepted.

Accepted bids are pre-paid, non-cancellable and non-refundable. Arrival and departure dates can not be changed.

If a bid is not accepted, one must wait 24 hours to rebid unless the travel dates, city, neighborhood, or hotel quality rating is changed.

After 24 hours have passed, the re-bid can duplicate a previously declined bid.

The downside of using Priceline is if bids are too low, they are a waste of time. If they are too high, they are a waste of money. The secret to avoiding the Priceline lose/lose scenario is to figure out how to make the lowest acceptable bid.

How Priceline Gets Worked – The Loophole
Since its inception in 1997, Priceline has had a loophole that can easily be exploited to avoid the 24-hour waiting period for rebidding.

The key is to enable rebids by adding additional neighborhoods to the search. The secret is that Priceline will allow users to add neighborhoods that do not have hotels with the desired quality level. If a shopper adds a neighborhood that only offer hotels with lower quality grades than the quality tier used in the bid, the rebid is enabled, but the universe of hotel candidates remains unchanged.

As if this basic loophole wasn’t enough, Priceline doesn’t simply flag previous zone searches, but allows users to get even more rebids by only tracking specific zone combinations.

Here is an example –

For clarity, let’s say New York City has only three zones:

Zone 1 – Times Square (has 5-star hotels participating)
Zone 2 – Upper East Side (no 5-star hotels participating)
Zone 3 – Upper West Side (no 5-star hotels participating)

Common sense would lead most to assume that if one wanted a 5-star hotel in Times Square, they would only make one bid, but using the rebid loophole, they get two “free” rebids – one extra for Zone 2 & Zone 3 respectively. Like this:

Bid 1 – Zone 1
Bid 2 – Zone 1 + Zone 2
Bid 3 – Zone 1 + Zone 2 + Zone 3

However, Priceline only considers exact zone combination matches when identifying duplicate bids. As a result Priceline provides an extra “bonus” rebid, allowing this series of bids:
Bid 1 – Zone 1
Bid 2 – Zone 1 + Zone 2
Bid 3 – Zone 1 + Zone 3
Bid 4 – Zone 1 + Zone 2 + Zone 3

With some cities offering up to 20 additional zones lacking 4-star hotels, the permutations and combinations enable a huge number of instant rebids.

The coding logic for Priceline to close these loopholes is easily implemented, but negatively impacts Priceline’s conversion rate – something consumers and Priceline shareholders do not want. Again, Priceline has been aware of this issue for 15 years, but hoteliers have reportedly not been outspoken in calling for its closure. The belief is that only a small minority of Priceline customers are aware of this capability, so exploitation of the loophole is limited.

The Process
While this is a multi-step process, the four steps are logical and not very complicated. The detailed steps are provided below, with a real-life example provided later.

Step 1: Find your bid floor and ceiling

1. Search Hotwire.com for the desired city, arrival/departure dates and party size. Check the ” Compare with Hotels.com” box before submitting the search – those results will be used in the bid floor calculation later.
2. Look at the Hotwire search results for the neighborhood(s) and quality rating (star-tier) you desire. The hotel rate will be used as your bid ceiling.
3. Now check the Hotels.com results. Filter the results by neighborhood and quality rating to identify the best available rate for a comparable hotel matching the desired neighborhood, hotel quality and stay dates. Multiply that rate by 30% (to reflect a 70% discount.) The result will be used as the bid floor. If the rate appears unreasonably low, try the calculation using 50%. Note that if your first bid is accepted, your floor may have been too high.

Step 2: Find the number of free re-bids.
NOTE: In the interest of simplicity, the method used to calculate rebids uses the first example used in the loophole explanation above. Any anal-retentive cheapskates (used here as a term of endearment) that feel true rebid process optimization should involve stair-stepping in one dollar increments, please feel free to knock yourself out and use the second method. Also, if you want to involve a spouse or partner with a separate email address and credit card number, you can go even further by doubling the number of bids. (In my opinion, this is unnecessary overkill.)

1. Search on Priceline.com’s Name Your Own Price Hotel product using the same city, dates and party size.
2. Look at the Priceline search results for the list of neighborhoods. This list will be used to determine the number of available rebids.
3. Check the first of the neighborhood selection boxes and note the neighborhood name if it only offers hotels in LOWER quality categories than the one desired.
4. Repeat this for each of the neighborhoods.
5. When finished with the list, count the number of neighborhoods that only offer lower quality hotels. This total, plus any number of target neighborhoods that include hotels of the quality desired, will be your total number of available bids. Don’t worry if you do not want to stay in some of these other zones. Since they do not have hotel inventory in the requested quality category, structurally, no hotel can be selected from that neighborhood.

Step 3: Calculate price increase to use after receiving failed bids.

1. Carefully prioritize a list of your target neighborhood(s), followed by the other zones with lower rated hotels. This will be the bid sequence that will be followed.
2. If you have more than one acceptable target neighborhood, check to see which are priced lower in Hotwire and sort them into ascending order.
3. Put the bid floor amount next to the first target neighborhood.
4. Add Hotwire at the end of the list and enter the bid ceiling amount next to it.
5. Subtract the bid floor amount from the bid ceiling amount.
6. Divide that result by the total number of entries in the neighborhood bid sequence.
7. The resulting figure will be the amount to be added to the price following every failed bid.
8. On the bid sequence list, fill in the amounts to be used for each individual bid.

Step 4: Start bidding.

1. For the first hotel on the list (your primary target) enter the bid floor as the Priceline bid, enter your initials & credit card security code when prompted and submit the bid.
2. If Priceline responds to a bid by stating there is a limited chance of success or proposing a higher bid, ignore it. Stick to your process.
3. If the bid is rejected, move to the second neighborhood on the list, check the corresponding neighborhood box in Priceline and change the bid to the rate associated with that neighborhood on your list.
4. Keep repeating steps 1-3 with the next neighborhood on the bid sequence list until a bid is accepted.
5. If no Priceline bid is accepted, book on Hotwire using the ceiling bid amount.

The Results
The number of deals found using this method are impressive. Over the last six months, here are some examples of the savings achieved:

• 67% off a 4-star hotel at Dallas – DFW Airport at $55 per night (Friday)
• 57% off a 3.5-star hotel in Downtown Denver – Downtown at $67 per night (Thursday)
• 48% off a 4-star hotel in New York – Times Square at $111 per night (Monday)
• 44% off a 4-star hotel in Minneapolis – Downtown at $49 per night (Friday)
• 42% off a 4-star hotel in Minneapolis – University at $94 per night (Saturday)
• 38% of a 4-star hotel in Los Angeles – LAX at $63 per night (Saturday)

Better yet, these bookings all reflected considerable savings over Hotwire, tallying 25%, 19%, 16%, 11% & 18% discounts respectively.

In deference to the dignity of the hotel groups involved, I have withheld the names of the specific properties associated with each deal listed above. Over the past 18 months, I have booked properties through Priceline affiliated with all major hotel groups including Hilton, Hyatt, InterContinental, Marriott, Radisson, Starwood and Wyndham, plus independent properties with similar results using this process.

Caveats
This approach does not work everywhere – it is predominantly North American focused where hotels are more inclined to offer inventory at opaque pricing tiers for groups like Priceline and Hotwire. It also works better in major markets that have many neighborhoods. As the opaque model continues to grow in popularity throughout the world, more neighborhoods will be added in destinations, introducing the opportunity for the recursive rebidding required for this approach to be successful.

As Priceline only books rooms with a maximum double occupancy using the “Name Your Own Price” option, it is not a good solution for families or friends interested in booking triple or quad occupancy for a single room.

Try to do all your analysis and bidding within an hour. It is highly unlikely that Priceline will add a new hotel in an undesirable “rebid” neighborhood during your bidding session, but that risk increases if you wait until the next day to bid after doing the initial research. Additionally hotel pricing can change considerably over a matter of hours, which can result in bids failing unnecessarily or paying more than required.

Remember not to bid on a neighborhood that has hotels in equal or higher star categories than the one being bid. Depending on the level of the bid, Priceline will occasionally pull a hotel from a higher quality tier. An accepted bid for a nicer than expected hotel in an undesirable location is still a problem.

Since Priceline hotel bookings are non-refundable, non-transferable and non-changeable, carelessness can get expensive. When it comes to Priceline bidding mistakes, the old saying applies – “You made your bed, now lie in it.”

If you need to also rent a car or take a flight, it may be more beneficial to book a package – some airlines and most car rental companies move distressed inventory through the package channel to shield their retail pricing structures behind a package rate that keeps the underlying component prices opaque. Booking the hotel separately from the car rental may prevent access to some deep package discounts.

Car rentals may be booked using Priceline’s Name Your Own Price service, but there are no rebidding loopholes similar to the one for hotels.

A Recent Practical Example
Warning – Hotel Owners already suffering from falling rate induced vertigo, irritable refinancing syndrome, OTA dependency or distribution channel dysfunction should not read any further. You have been warned.

Target Hotel Stay -
Location/Neighborhood: Dallas, Texas – DFW Airport North
Hotel Quality: 4-stars
Arrival: Friday, May 19, 2012
Length of Stay: 1 Night

Bid Ceiling Calculation -
Hotwire Base Rate: $75.00 | $94.16 including taxes & fees for 4-star hotel Dallas – DFW North and Grapevine

Bid Floor Calculation -
Hotels.com Lowest DFW 4-star Best Available Rate: $89.00 (Westin Dallas Fort Worth Airport)
Bid Floor: $45.00 (rounding 50% off Westin best available rate)
NOTE: As the Westin rate was already at least $40 lower than the next closest four-star hotel in the area, it was highly unlikely the hotel would offer a rate 70% off an already discounted price. The floor bid was calculated by taking 50% off the discounted $89.00 rate.

Bid Count / Bid Strategy -
Area | Highest Star Rating
1. DFW Airport North | 4 (Target)
X. Downtown Dallas | 4
X. Frisco – Plano North | 4
X. Galleria – Dallas North | 4
X. Irving – Las Colinas | 4
X. Knox – Northpark | 4
X. Market Center – DAL Love Field | 4
X. Park Central | 4
X. Richardson | 4
2. Arlington – Grand Prairie | 3.5
3. Dallas Northwest | 3.5
4. Allen – McKinney | 3
5. Arlington South | 3
6. DFW Airport South | 3
7. East Dallas – Mesquite | 3
8. Garland North | 3
9. Hurst – Euless – Bedford | 3
10. Lewisville | 3
11. Plano East | 3
12. Plano West | 3
13. Carrollton – Farmers Branch | 2.5
14. Dallas West – Pinnacle Park | 2.5
15. Garland | 2.5

Qualifying Neighborhoods/Bids: 15
Difference Between Bid Ceiling & Bid Floor: $30.00 ($75.00 – $45.00)
Bid Steps: $2.00 ($30.00 / 15 Bids)

Bid Execution -

1. $45.00 (DFW Airport North) Unsuccessful
2. $47.00 (+ Arlington – Grand Prairie) Unsuccessful
3. $49.00 (+ Dallas Northwest) Unsuccessful
4. $51.00 (+ Allen – McKinney) Unsuccessful
5. $53.00 (+ Arlington South) Unsuccessful
6. $55.00 (+ DFW Airport South) Successful
7. $57.00 (+ East Dallas – Mesquite)
8. $59.00 (+ Garland North)
9. $61.00 (+ Hurst – Euless – Bedford)
10. $63.00 (+ Lewisville)
11. $65.00 (+ Plano East)
12. $67.00 (+ Plano West)
13. $69.00 (+ Carrollton – Farmers Branch)
14. $71.00 (+ Dallas West – Pinnacle Park)
15. $73.00 (+ Garland)
16. $75.00 Hotwire – Ceiling

Winning Bid: $55.00 ($70.16 including taxes & fees.) 67% off Hotel Brand.com website best available rate of $169.00 ($212.33 inclusive) and 25% below Hotwire 4-star Dallas – DFW North and Grapevine $75.00 rate ($94.16 inclusive.)

The Unintentional Gamification of Hotel Booking
Unfortunately, the hoteliers have turned the hotel booking process into a game, so I play that game to the best of my ability. On the rare occasion Priceline does not provide a lower rate, I always have the Hotwire ceiling rate to fall back on and those savings normally run in the 25 to 50% range.

Hotwire, may be a good alternative for those unwilling to do a bit of extra work for a deeper discount, but their reputation has slid somewhat since Hotwire sabotaged their hotel rating scale to bump some half-star properties into higher rating categories.

To sprinkle some additional salt into the wounds of the hoteliers, suffice it to say that in every case, I would have been happy to pay the Hotwire rate. In the Dallas example, I would have been happy paying the $89 at the Westin – that’s a pretty good deal. However, as I am now playing a game, I don’t want to do well, I want to win.

These excessive discounts do little to earn loyalty or provide any motivation to return to the hotel when paying full price – unless perhaps if someone else is paying for the return trip. More than doubling the price for a product substantially changes the value equation – and the full retail value equation suffers irreparable damage when such deep discounts are experienced.

That is not to say that getting these low rates doesn’t inspire loyalty; it’s just that the loyalty is gained by the intermediary, not the hotel providing the accommodation. Priceline’s Name Your Own Price website, not the hotel website, now becomes the starting point when a return trip is planned for that city.

Consistent 33-67% savings provide sufficient incentive to replay the game and bid on a 4-star hotel in the same neighborhood on the next trip. There is always a good chance that one might return to the same hotel.

The reward to the consumer for playing is not just financial. Getting the lowest possible hotel rate also satisfies competitive instincts and provides an intellectual challenge. It’s mano a mano – guest versus the hotel revenue managers in that wallet tug-o-war.

Game playing travelers quickly learn that like a Cheetah, to win, one doesn’t need to run faster than all the antelopes, just the slowest member of the herd…

Is the time spent searching for benchmark rates and calculating bid differentials worth the benefit? That’s exactly the point. In the Dallas example, the savings were $142 (inclusive) when compared to the hotel’s BAR rates, but a better measure is that the winning bid was $24 (inclusive) lower than the Hotwire rate and $32 (inclusive) lower than the Westin rate. For some, that might not be enough to justify the additional effort.

However, for the hotel booking game aficionado, the principal satisfaction is not the financial savings, but playing the game well and besting the opponent. Accomplishing a clearly defined goal and not succumbing to the temptation to compromise by paying more than required may be sufficient reward in itself. It’s not a financial equation, it’s an emotional one.

In summary, promoting “4-star Hotels at 2-star Prices” or “Save up to 60% by naming your own price” are not healthy messages for the hotel industry. A generation of guests, one that has grown up with extensive training in gaming related skills, are learning through positive reinforcement to not trust brand messaging and to relay on various intermediaries to provide deeply discounted, high value offers.

For the hotel industry, this problem is compounded by the oblivious management or lazy revenue managers whose under-performance reinforces that sentiment – They ultimately bear a majority of the blame for doing their hotels and the industry a disservice. That’s the hotelier side of my brain speaking.

Each time I book a laughably low hotel rate, the hotelier in me weeps a little bit. Then I quickly get over it as the consumer side of my brain basks in the glory of another relatively easy victory over the missing links of the hotel and revenue management professions.

I may be conflicted, but I am not stupid enough to pay more than required for a hotel room of the quality I desire in a neighborhood I prefer.

Earlier this year, Priceline killed off their long running ad campaign starring William Shatner.

R.I.P. The Negotiator… The Priceline rebidding loophole sustains your legacy.

Related posts:

1. Hotwire Expands Menu – Adds Bed Choice
2. Travel Industry Site Traffic Rebound – Not a Hotel Slam Dunk
3. Leading Hotels of the World – Marketing Conference Presentation

Travel Gamification – How to Save Money Booking Hotels