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Author: Dennis Schaal
Both companies offer consumers hotel bargains on their free iOS and Android apps when booking specially negotiated rates for hotel stays starting that afternoon or evening.
Hotel Tonight promises customers discounts of up to 70% while Priceline’s knock-off Tonight-Only deals pledges savings of up to a mere 35%.
And, the discrepancy in their competing claims is the flash point.
As it does against other competitors, Priceline in May compared Hotel Tonight’s strikethrough price (the basis for its savings claims) at 2,024 randomly selected properties with the retail rate for the same dates on Priceline.com. The rate comparisons were made within five minutes of one another.
Priceline’s internal study found that 46.9% of the time — at 951 properties — Hotel Tonight’s strikethrough price was higher than the rate consumers could have readily found on Priceline.com for the same property on the same date.
For the remainder of the properties, Hotel Tonight’s strikethrough rates were the same or lower than the retail rate on the Priceline website.
What does it all mean?
Although consumers may be finding great bargain rates at trendy hotels on Hotel Tonight, almost half the time the amount of the savings may be pumped up when compared with retail rates that might be found on major online travel agency sites.
“It’s important that consumers understand where savings claims come from and how they differ from service to service,” says Brian Ek, Priceline spokesperson. “We take the regular published price that’s available on our desktop site at the time our Tonight-Only deal is published and use that as the basis for calculating savings.”
“We believe other services often use the rack rate for calculating their savings,” Ek adds.
Part of the issue is that Hotel Tonight comes up with its strikethrough price with a rate-checking tool that makes at least daily visits to the hotel website to get published rates on rooms that have private bathrooms and would accommodate two adults.
And, the retail rates that are the basis of Priceline’s Tonight-Only savings calculations may include these types of rooms and others that may only accommodate one person, for example.
Thus the published rates that Hotel Tonight uses as a barometer of the market, and which are the basis for its strikethrough prices, may be higher than rates that travelers could easily find on Priceline, Expedia or Travelocity.
“We work very hard to ensure the accuracy and transparency of all deals on Hotel Tonight,” says Jared Simon, Hotel Tonight’s co-founder and chief operating officer. “Based on extensive customer feedback, we determined that the most consistent, accurate point is the hotel’s own website.”
“As a result, it’s not surprising that our comparison rate seldom matches what Priceline displays as the ‘retail’ rate,” Simon adds.
There are several other issues at play in this controversy.
Simon of Hotel Tonight argues that Priceline’s lower retail rates might be due to the fact that the online travel agencies sometimes offer “teasers” from the hotels — namely very low rates for small rooms to serve as “low price leaders.”
And, Ek of Priceline concedes that these type of rooms indeed sometimes are the best available rate on the site.
But, Ek further points out neither Hotel Tonight nor Priceline’s Tonight-Only deals guarantee a room type.
And, Ek contends therefore that it is disingenuous for Hotel Tonight to use a strikethrough price based on the published rate on a hotel website for a room for two with a private bathroom when Hotel Tonight can’t guarantee that the guest will be assigned such a room when they arrive at the hotel.
The Better Business Bureau code of advertising has guidelines about price reductions and savings claims, including using a company’s “own former selling price” (which wouldn’t apply to HotelTonight); “the current selling price of identical merchandise sold by others in the market area;” or “the current selling price of comparable merchandise sold by the advertiser or by others in the market area.”
The bottom line is that claims of purported discounts, with some companies playing fast and loose with these figures, is a big problem throughout the industry. Some transparency on how companies calculate their strikethrough prices or discounts would be a welcome initiative.
Companies should just be open — and publish it prominently on their websites or in their apps — about the basis for their claims.
Meanwhile the tiff between Priceline and Hotel Tonight demonstrates that the same-day hotel booking sector is heating up and growing, with other companies such as Priceline’s Booking.com, Orbitz, Blink and ReallyLateBooking getting involved, as well.
Priceline is likely prepared for any battle: One of the last times I saw Priceline go after a competitor like this was when Hotwire launched more than a decade ago.