Priceline is popular for helping travelers get deals on flights, hotels, rental cars and more. But why are hotels willing to sell inventory through the opaque Priceline model, where they don’t know details about the guest? There are several strategic reasons hotels partner with Priceline.
If you’re short on time, here’s a quick answer: Hotels work with Priceline to sell distressed inventory they wouldn’t sell otherwise, expand their reach, and steer value-focused guests away from bartering on direct rates.
Offload Distressed Inventory
Hotels often choose to sell rooms to Priceline in order to offload distressed inventory. This refers to the rooms that are not selling well or are at risk of going unsold. By partnering with Priceline, hotels can fill these rooms and generate revenue that would otherwise be lost.
Fill last-minute cancellations
One reason why hotels sell rooms to Priceline is to efficiently fill last-minute cancellations. When a guest cancels their reservation at the eleventh hour, hotels are left with empty rooms that could potentially go unsold.
Rather than letting these rooms sit empty, hotels can offer them to Priceline, who can find a last-minute traveler looking for a great deal.
Sell rooms during low occupancy seasons
During low occupancy seasons, hotels often struggle to fill their rooms. By partnering with Priceline, hotels can sell their rooms at discounted rates and attract price-conscious travelers who may not have considered staying at their property otherwise.
This helps hotels maximize their revenue during slower periods and maintain a steady occupancy rate throughout the year.
Dispose of rooms not selling on own site
Hotels may also choose to sell rooms to Priceline as a way to dispose of inventory that is not selling well on their own website. Despite their best efforts in marketing and promotions, some rooms may still go unsold.
In such cases, partnering with Priceline allows hotels to reach a wider audience and increase the chances of selling these rooms.
According to a study conducted by HospitalityNet, hotels that sell distressed inventory through online travel agencies like Priceline can experience a significant increase in occupancy rates. The study found that hotels selling distressed inventory through online platforms saw an average increase of 15% in occupancy compared to hotels that did not utilize these channels.
Attract Deal-Seeking Travelers
Hotels choose to sell rooms to Priceline because it allows them to attract deal-seeking travelers. Priceline is known for offering discounted rates, making it an attractive option for budget-conscious travelers who are looking for the best deal.
By partnering with Priceline, hotels can tap into a price-sensitive market segment and attract a broader range of guests who may not have considered staying at their property otherwise.
Tap into price-sensitive market segment
One of the main reasons hotels sell rooms to Priceline is to tap into a price-sensitive market segment. Priceline negotiates deals with hotels to secure discounted rates, allowing them to offer travelers lower prices than what they would find through traditional booking channels.
This appeals to travelers who are looking for the best value for their money and are willing to be flexible with their hotel choices.
According to a study conducted by Statista, 72% of travelers consider price to be the most important factor when booking a hotel. By partnering with Priceline, hotels can attract these deal-seeking travelers and fill their rooms during periods of low occupancy.
Upsell Priceline guests once on property
Selling rooms to Priceline also provides hotels with an opportunity to upsell guests once they are on the property. While Priceline guests may have initially booked a discounted rate, hotels can still generate additional revenue by offering upgrades, amenities, or services during their stay.
This allows hotels to maximize their revenue potential and provide a better overall guest experience.
For example, a hotel could offer Priceline guests an upgrade to a suite at a discounted rate or promote additional services such as spa treatments or dining experiences. By upselling Priceline guests, hotels can increase their profitability while still providing value to the guest.
Give rate flexibility without impacting brand image
Selling rooms to Priceline also gives hotels the flexibility to offer discounted rates without impacting their brand image. By partnering with Priceline, hotels can maintain their regular rates for direct bookings while offering discounted rates exclusively through the platform.
This allows hotels to attract price-sensitive travelers without devaluing their brand or undercutting their regular rates.
Additionally, hotels can strategically manage their inventory by controlling the number of rooms they allocate to Priceline. They can adjust the availability of discounted rooms based on their current occupancy levels and demand.
This ensures that hotels can fill their rooms without having to heavily discount them through other channels.
Increase Exposure
Hotels choose to sell rooms to Priceline for a variety of reasons, and one of the main reasons is to increase their exposure to a broader audience. Priceline is a well-established online travel agency that attracts millions of potential customers every day.
By listing their rooms on Priceline, hotels can reach a much larger pool of potential guests than they would be able to on their own.
Reach broader audience through marketing
Priceline invests heavily in marketing and advertising to promote their platform and attract customers. This means that when hotels partner with Priceline, they benefit from the company’s extensive marketing efforts.
Priceline’s marketing campaigns reach a wide range of travelers, including both leisure and business travelers, which allows hotels to tap into new markets and attract guests they may not have reached otherwise.
For example, Priceline’s marketing campaigns often target specific demographics or travel segments, such as budget travelers or last-minute bookers. By partnering with Priceline, hotels can leverage these targeted marketing efforts to reach the right audience for their property.
Benefit from Priceline’s conversion optimization expertise
Priceline has years of experience in the online travel industry and has developed advanced conversion optimization techniques to maximize bookings. When hotels sell rooms to Priceline, they can take advantage of Priceline’s expertise in optimizing their online presence to drive more bookings.
Priceline continuously tests and refines their website design, user experience, and booking process to ensure a seamless and efficient booking experience for customers. By partnering with Priceline, hotels can benefit from these optimizations, which can lead to increased bookings and revenue.
Partner promotions and flash sales
Priceline frequently runs promotions and flash sales, offering discounted rates and exclusive deals to their customers. Hotels that sell rooms through Priceline can participate in these promotions and benefit from the increased exposure and bookings they generate.
These promotions are often highly visible and attract a large number of customers looking for great deals. By participating in these promotions, hotels can attract new guests and fill their rooms during periods of low occupancy.
Gain Insights From the Process
Hotels often choose to sell rooms to Priceline, a popular online travel agency, for several reasons. By understanding the process, hoteliers can gain valuable insights that can help them make informed decisions about their pricing and distribution strategies.
Understand demand for opaque discounted rates
One of the main reasons hotels sell rooms to Priceline is to tap into the demand for opaque discounted rates. Priceline’s “Name Your Own Price” feature allows customers to bid on hotel rooms without knowing the specific hotel they will be staying at until after the booking is confirmed.
This type of booking appeals to budget-conscious travelers who are willing to trade some control over the hotel selection for a significant discount. By participating in Priceline’s platform, hotels can attract a different segment of customers who are specifically looking for these types of deals.
Measure willingness of guests to pre-pay
Another benefit of selling rooms to Priceline is the opportunity to measure the willingness of guests to pre-pay for their accommodations. Priceline requires guests to pay upfront before revealing the hotel name, which allows hotels to gauge the demand for pre-paid bookings.
This information can be useful for hotels to assess the potential success of their own pre-paid offerings and to optimize their revenue management strategies.
Monitor reviews and feedback
Hotels also gain insights from the reviews and feedback left by Priceline customers. By closely monitoring these reviews, hotels can identify areas for improvement and make necessary adjustments to enhance the overall guest experience.
Additionally, positive reviews can help hotels build their reputation and attract more guests through Priceline and other channels.
The Risks of Relying Too Much on OTA Channels
Hotels often rely on Online Travel Agencies (OTAs) like Priceline to sell their rooms and reach a wider audience. While these partnerships can be beneficial, there are also risks involved in relying too much on OTA channels.
Erosion of rate parity
One of the main risks of relying heavily on OTA channels is the erosion of rate parity. OTAs often offer discounted rates to attract customers, which can lead to a decrease in direct bookings through the hotel’s own website.
This can create a disparity in rates, causing frustration among guests who find better deals on OTA platforms. It also impacts the hotel’s revenue, as they have to pay commissions to the OTA for each booking.
According to a study conducted by Hotel News Now, hotels that heavily rely on OTAs can experience a decline in direct bookings and a decrease in overall revenue.
Less control over brand reputation
Another risk of relying too much on OTA channels is the loss of control over brand reputation. When hotels sell their rooms through OTAs, they are essentially relying on these platforms to represent their brand accurately.
However, hotels have less control over how their property is presented, what information is displayed, and how customer reviews are showcased.
This lack of control can be detrimental to a hotel’s reputation, as negative reviews or inaccurate information can impact a potential guest’s decision to book a room. It is important for hotels to maintain a strong presence on their own website and focus on building direct relationships with guests to mitigate this risk.
Lower rev par performance long-term
Relying heavily on OTA channels can also have long-term implications on a hotel’s revenue per available room (RevPAR) performance. While OTAs can provide a boost in bookings, they often come at a cost. Hotels have to pay commissions to the OTA for each booking, which eats into their revenue.
According to a report by Sojern, hotels that focus on direct bookings tend to have higher RevPAR than those heavily reliant on OTAs. By reducing dependence on OTA channels and investing in direct marketing efforts, hotels can maximize their revenue potential.
Conclusion
Priceline allows hotels to handle distressed and unsold inventory discreetly while casting a wide net for deal seekers. But growing an OTAs customer base too much can undercut direct bookings. Hotels must strike the right balance to maximize revenue across channels.
