Seat 2B By Joe Brancatelli
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No Room for Sane Hotel Rates
May 19, 2016 -- You'd like to know where you can find the lowest prices on hotel rooms. So would I. I would also like my hair back. Neither is likely to happen any time soon.

We've talked about the wacky world of hotel pricing before, but things are getting nuttier than ever.

Many hotel chains, for instance, recently introduced "members only" rates. The chains promise exclusive discounts of as much as 10 percent and urge you to join their respective frequent guest programs to score the insider pricing.

The problem? The supposed members-only rates aren't anything like the best prices available. In most cases, they aren't even better than the nightly rates you can score with membership in the AAA auto club or the AARP, which signs you up if you're as young as 50 years old.

"What we're doing [with member rates] is a gimmick, not a genuine discount," admits a hotel sales director who won't talk on the record for obvious reasons. "It takes about 10 seconds to figure that out on our website."

Want another gimmick? Most any hotel chain's "best price guarantee."

The chains insist that the nightly rates displayed on their proprietary websites are the lowest you can find. If they aren't, the chains promise in bold print, they will meet or beat any lower price offered on a third-party website or via online travel agents (OTAs) such as Expedia.com or Priceline.com. The truth is something else again. The fine print of the guarantees is written to ensure that you can almost never cash in because there are so many exceptions and exclusions.

The cause of this chaos and pricing sleight-of-hand is the uncomfortable relationship between the OTAs, the big lodging chains and the individual property owners.

The OTAs move huge volume, perhaps as many as four in ten rooms sold nationwide on an average night. But they charge hotels a frightfully high price for the service, perhaps 20-25 percent of the nightly rate.

Hotel chains are desperate to seize business back from OTAs and redirect us to their own websites. To make their proprietary sites seem more attractive, they not only promote the fanciful special rates and price guarantees, but they are also merging and inventing "soft brands" of independent properties to increase the number of properties they offer.

Between the OTA giants and the major chains are individual property owners. They pay the chains as much as 15 percent of their top-line revenue for the right to use the brand name and then shell out more when they sell via the online agents. Despite these brutal financial bites, their goal is to fill as many rooms as they can for as much as they can. That's no easy task when you consider new hotels are opening at a record-setting pace and as many as a third of the nation's existing accommodations are empty on an average night.

The result is the booking bazaar we business travelers must navigate whenever we need a room. There are literally hundreds of places to book and no single source has the best rate all of the time.

How do you make sense of the craziness? Here are some snapshots from the rate wars.

Nightly rates are fluid

It's a mistake to assume that a hotel's nightly rate is a static and immutable marker. For the past few days, I've tracked a random collection of hotels around the nation for a theoretical one-night stay on Friday, May 20. As you can see by the chart, rates changed frequently. The lesson learned? Keep checking to see if you can book on a price dip. Even in medium-sized markets such as Cincinnati and Memphis, the difference can be $40 a night or more. And remember: you're trying to outguess computers, so be persistent.

Ignore those member rates

The chains that have launched member-only rates are, indeed, involved in marketing sleight-of-hand rather than serious discounting. As you can see by the chart, no member-only rate was lower than other special discounts available. There are plenty of good reasons to join hotel frequency programs upgrades, free breakfast, complimentary WiFi, late check-out and early check-in but lower member-only rates aren't part of the equation.

Focus on proven options

My experience over many years of business travel has been that AAA and senior/AARP rates are generally the lowest available public rates, especially at major chain properties. My checks this week with the randomly chosen hotels bears this out. The AAA or AARP price was consistently lowest. Even if you don't need AAA for auto service, it's worth the modest annual fee to join for access to the hotel discounts. And at $16 or less a year, AARP is worth joining, too, if you've hit the big 5-0.

Online travel agencies aren't a panacea

As you can see by the chart, behemoth OTA Expedia.com didn't offer the lowest rate this week on any hotel. Nor did Kayak.com or Trivago.com, two websites that scan and aggregate the nightly rates offered by dozens of other hotel booking sites. But that doesn't mean the hotel chains' sites are the most reliable source for the lowest price. There are many times when individual hotel owners give inventory at very low rates to OTAs. I personally don't find third-party sites a good use of my time, but your mileage may vary.

Chains penalize OTA bookings

If you find a better rate on a third-party site, book at your peril if you value your chain's frequent guest program. Many have punitive rules about bookings made via the online travel agencies. You may be denied your elite status benefits, for example, and you may not even receive points for the stay. If you're planning a third-party booking, check the terms and conditions of your frequent guest plan to see if it qualifies for points and/or elite benefits.

Reconsidering an old favorite

Business travelers frequently ask me if calling directly to a hotel to negotiate a discounted rate is a useful strategy. My response? Many properties in the major chains can't even book your room reservation anymore. If you call, you'll most likely be transferred to the chain's central reservations service. However, high-end resorts, deluxe big-city hotels and independent properties do still maintain on-site sales personnel, so that's when it may be worth your time to call and try to negotiate.


This column is Copyright 2016 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright 2016 by Joe Brancatelli. All rights reserved.