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Did you know that Priceline includes a hidden extra fee on every booking you make with them?

Be sure to fairly compare 'apples with apples' when evaluating your Priceline rates.

 
 
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More Considerations When Buying Hotel Rooms Through Priceline

Understand the hidden extra costs of a Priceline booking
 

Do Priceline guests get the worst hotel rooms?  Maybe - and maybe not.  It is as much up to you and how polite you are.

Part 4 of a series on How to book hotels at the lowest price on Priceline - please also visit

1.  An introduction to Priceline
2.  How much to bid
3.  How to rebid in less than 24 hrs
4.  The true cost of a Priceline bid

 

 

Hotels have a love/hate relationship with Priceline and us as their Priceline guests.

They love our business, but hate the low rates they get from us.  Most hotels however see their glass as half full rather than half empty, and if you're a polite positive guest, you'll get treatment as good as their full paying guests.

Note also that Priceline adds some obscured fees to the base rate you offer to buy a hotel room at - be careful you don't inadvertently end up paying more for a hotel than you might from another source.

Calculating the True Cost of Your Bid

Here's a nasty trick Priceline chooses to play on us.  After you've made a bid they then add what they refer to as 'taxes and fees' to your bid amount.  So your (eg) $75 bid might end up costing you close on $100.

We all know that a hotel room rate has various state, county and city taxes and surcharges added to it, so on the face of it, it seems fair that Priceline does the same thing.  But - and here's the nasty trick - the amount of taxes and fees Priceline adds to the bid is much greater than the taxes and fees you'd pay if booking directly with the hotel.

In other words, Priceline's taxes and fees include an obscured extra profit component that goes to Priceline (in addition to the profit they make in the difference between the rate you pay them and the rate they pay the hotel for the room in the first place).  This means that paying Priceline $75 (plus its taxes and fees) is not the same as paying the hotel directly $75 plus the true taxes and fees the hotel charges.

The extra charges from Priceline seem to combine both a flat fee add-on plus also a small extra percentage amount too.

Doing a careful analysis shows that, for my Vancouver bookings, Priceline is charging both a fixed fee per booking of about $7 plus also a percentage fee per booking of just over 17%.  This compares to the actual percentage for taxes that is charged by Vancouver hotels of 16.5%.

So it seems that in general, there is an additional hidden fee of about $7 plus maybe another percent or so that gets blended into the Priceline price.

In other words, if you are booking for a one night hotel stay in Priceline, then you need to realize that your 'bid price' - for example, $75 - needs to have at least an extra $7 added to it to fairly compare 'apples with apples' as between the Priceline price and the hotel price, due to Priceline hiding some extra profit/costs into what it terms 'taxes and fees'.

Of course, if you are making a two night booking, this fixed $7 fee becomes only $3.50/night extra, and so on for longer stays.

The Other Side of the Story - Overpaying through Priceline

it is important to understand there is no guarantee you will get a below market rate for your hotel stay when bidding through Priceline.  Quite the opposite.  There is a danger you might end up paying over the going rates for your stay.

This almost happened to me in November 2010.  I was trying to book a four night hotel stay in Hong Kong, and started bidding at a rate of $85/night.  I edged my bid price up in $5 increments all the way to $140, at which point I stopped, with Priceline still not accepting my bid.

I was able to book a hotel directly for $134/night.  I have no idea how much I might have ended up paying through Priceline, but clearly in this case, if I had continued raising my bidding up and up, I would have eventually ended up paying significantly more then I paid by making a fully informed selection through Expedia.

The Other Side of the Story - How Hotels View Priceline

Hotels are in much the same situation as airlines - they have a perishable product with low variable costs but high fixed costs.  They get increasingly keen to sell room nights the closer it gets to the actual check-in date, but they have to be very protective of their published and private rates.

Even though we all know that the person seated next to us on a plane might have paid half as much (or twice as much) as we did, and even though we sort of have come to accept that situation, there is not the same degree of acceptance with hotel rates, and guests are more likely to get upset if they discover they paid twice the rate for an identical room as the person in the room next to them.

So, hotels have this terrible conflict.  How to bring in more business, without destroying their ability to sell their rooms for top dollar to people who are willing to pay top dollar?

This is the 'secret sauce' that Priceline brings to hoteliers.  Priceline gives a hotel a defensible strategy for remaindering off their unsold rooms.  In theory, it never becomes public knowledge if a hotel is selling rooms via Priceline or not, and - even if it does become public knowledge - there's no clear understanding of the rates at which the hotel is selling the rooms for, or which nights it is making rooms available.

Priceline has done the best it can to give the hotels excuses to use with their other guests, and with their corporate accounts.  If a guest or corporate account says something like 'You promised us your best rate, and we give you 100 (or 1000 or even 10,000) room nights a year so we deserve your very best rate, but now we discover that you are selling rooms through Priceline for 30% less than our special contract rate' the hotel can answer several different ways.

It can point out that the Priceline rates are very limited in availability - some nights they are there, and some nights they are not.  It can point out that sometimes the Priceline rates are indeed below the contract rate, but it can also suggest that sometimes the rate might be the same or higher.

The hotel can also remind their corporate account that the Priceline rates are 'no changes, no refunds' whereas corporate rates probably allow for free changes or cancels at any time - something very important to corporate travelers.

The hotel can point out that it also offers free upgrades on its contract rates, but Priceline rates get the lowest room category with no courtesy upgrades.  It can add that the Priceline rates don't get frequent guest points, whereas the contract rates probably do.  Maybe the corporate rate guest also gets a discount on internet access or some other benefit, whereas the Priceline guest again does not.

And so on and so on.  Any hotel worth its salt can easily talk itself out of such a discussion.

But, even so, some hotels are terrified of working with Priceline.  Here's a comment from one such hotelier :

I never used it as it is for bottom feeders.  The guests are dirt bags.  Your steady accounts--corporate, high end travel agents, tour operators, OTA's and groups will find out that you are using it and will get pissed off, if you don't give the cheap rates to them too.  We tested it in [a major city] and got caught by a few corporate accounts and steady travel agents.

Bottom feeding dirt bags?  So now you truly know how some hotels and hoteliers feel about guests who choose to pay the least possible for their rooms.  If it is any consolation, such hoteliers are usually much too snooty to 'dirty their hands' with Priceline; and those hotels who do work with Priceline generally see their glass as half full rather than half empty.  They appreciate your business, even if the rate is way below normal.

I've often discussed the fact that I got my hotel room for a bargain rate through Priceline when checking in to a hotel, and the reception staff have always been very gracious about it.  After all, it was the hotel's own free choice to offer their rooms through Priceline - they wanted to sell them at the rate I paid (and - who knows - perhaps even for less) or else they'd not have done so.

A suggestion, though - be courteous to the check-in clerk.  The chances are they'll notice that you have a Priceline booking, and you don't want to be perceived as the bottom feeding dirt bag that the hotel manager above so stridently describes us.  If you're rude, you'll probably find yourself given one of the hotel's least desirable rooms.  But if you're polite and courteous, you have more of a chance of getting the same standard of room that 'normal' guests receive - indeed, I've been upgraded, even to suites, just by being polite, positive and friendly.

Hotels can Profit Many Different Ways from Your Stay

A hotel can make a profit even on a very low room rate.  Depending on the standard of hotel, it probably costs them about $25 - 40 per night to have someone stay in a room.  If they can sell a room that would otherwise be empty for anything above that, they're making a small profit, and they're keeping their staff employed and the lights on.  They're also keeping you away from their competitors.

Plus - don't forget about the other ways they make money from you.  How much did you pay for parking?  That can be close to $30/nigh and sometimes much more.  And internet access?  That might run you another $15/night (and again sometimes much more).  If you eat or drink in the hotel, you're running up the hotel's profit from your stay still further.  And if you use the phone in the room to make a phone call, or if you watch a pay movie, you're again pressing profit into the hotel's hands.

Hotels can make money from you even if they barely break even on the basic room cost.

Summary - The Best Way of Using Priceline

If you are needing hotel accommodation and can accept making a booking with full payment in advance and no cancel/change provisions, and if the thought of not knowing exactly which hotel you'll be staying at, or where other than the general area, are also acceptable, you should use Priceline as part of your hotel booking strategy.

First go to the two websites with details of successful bids - BetterBidding.com - you can directly access their calendar of successful bids here, and BiddingForTravel.com to see if you can find any information on what price winning bids are being accepted for hotel stays at your destination at present, and also confirm to yourself that the hotels being offered are acceptable to you.

If all looks good, go to Priceline and make a bid, starting with a bid somewhat below the current level of winning bid, then use our four strategies for multiple bidding and allow the bid to increase as you rebid if necessary.

If you can't get a bid accepted, consider using Hotwire if they have good deals, or a regular hotel booking service, and booking an acceptable hotel instead.

If at first you don't succeed - keep trying

Now - here's an important extension of your strategy.  Assuming your booking on any other booking service can be canceled without penalty, continue to try to get a bid accepted on Priceline.  Remember that hotels open up and close off their inventory on what seems to us to be a semi-random basis.  Just because there were no rooms available at rock bottom prices yesterday does not mean that there might not be rooms available today.

Lastly - if/when you do get a winning Priceline bid, be sure to remember to cancel any other hotel bookings you may have also made, and to share the details of your success on the two websites mentioned above.

Read more in the rest of this series

This is part 4 of a series on How to book hotels at the lowest price on Priceline - please also visit

1.  An introduction to Priceline
2.  How much to bid
3.  How to rebid in less than 24 hrs
4.  The true cost of a Priceline bid

 

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Originally published 14 Aug 2009, last update 19 Dec 2013

You may freely reproduce or distribute this article for noncommercial purposes as long as you give credit to me as original writer.

 
 
 

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