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Welcome to the wild and wacky world of hotel pricing.
There’s been so much talk of late that all hotel rates across the Web are basically the same because all the major hotel chains, from Marriott and InterContinental to Starwood, insist that online travel agencies offer rooms at the same rates that the hotels’ own websites do.
In fact, a class-action lawsuit was just filed against hotels and online travel agencies, alleging they fix prices with these policies, and thereby artificially inflate your hotel bills.
And, UK regulators are attacking the notion of rate parity, as well.
The parity parade
And, there is indeed an overwhelming amount of parity parading around, as is seemingly apparent on hotel-comparison site Kayak.com, for instance:
And on the first Kayak listing (above) that I reviewed, for a stay at the Sheraton Los Angeles Downtown Hotel on August 31, I discovered some hotel rate disparity.
I made two separate reservations for that evening at the Sheraton Los Angeles Downtown, one on the hotel website, Starwood.com, and the other on Priceline-owned Booking.com.
A traditional double room at the property, in a reservation made through the hotel website, would cost $195.33, including all taxes and fees, payable at the hotel.
And, the identical reservation — same date, room type and lack of prepayment requirement — would cost $172.09 when made through Booking.com.
So Booking.com’s nightly rate for the property was more than $23 cheaper than the rate on Sheraton’s own website.
Something’s wrong — or at least complicated
That kind of pricing disparity is not supposed to happen.
Around midway through the past decade, major hotel chains got fed up with Expedia.com and Hotels.com under-cutting them on rates, clamped down, and insisted that these online travel agencies would only get to sell their rooms if they do so on a level-pricing playing field.
So why did Booking.com beat the Sheraton website today on the room rate for the Sheraton Los Angeles Downtown?
Ian Gee, the general manager at the Sheraton Los Angeles Downtown, says Sheraton works with wholesalers/tour operators and contracts to offer them blocks of rooms at discount rates to be sold as part of vacation packages, including flights and hotels, for example. These wholesalers get discounts in exchange for buying big volumes of rooms.
Gee says sometimes “unscrupulous contractors” among the wholesalers opt to offload some of these rooms at wholesale rates to online travel agencies.
“That’s really the only way it could happen,” says Gee, speculating on how Booking.com might have offered the rooms at the lower rate.
Gee declined to name the wholesalers which Sheraton works with, but says the hotel will investigate the contract breach and likely reprimand the guilty party.
In cases where someone reserves a Sheraton room on the hotel website and finds a lower rate online in the interim, the Starwood Best Rate Guarantee kicks in, and the hotel would honor the reduced rate, Gee says.
There are other reasons besides wayward wholesalers why you may find deals and discounts when conducting online hotel searches.
One former hotel executive for a major online travel agency says sometimes when a property is owned by a franchisee — and not owned and operated by the chain — the local property will go “rogue” and offer an online travel agency cheaper rates to push some room reservations when occupancy is low.
Gee noted that the Sheraton Los Angeles Downtown is indeed a franchisee, but wouldn’t engage in such practices.
“We would be caught in our own game, so to speak,” Gee says, arguing that it would be counterproductive and strictly against policy.
Technical glitches can also lead to what might be called rates gone wild from time to time.
When examining hotel pricing across the Web, there indeed is a lot of uniformity, although it doesn’t take long to dig in and find some bargains.
Kayak has even begun to trumpet the hotel-rate variation for various properties.
On August 25, Kayak was indicating a “$36 difference across 8 sites” in the nightly rate for Springhill Suites Sarasota Bradenton when searching for a November 9-11 stay.
And, in fact you could book the same room types — a studio with a king bed or a studio with two double beds and a sofa — on the hotel website, Marriott.com, for $79 per night and on Orbitz.com for $115 per night.
The same rooms, both requiring prepayment, but the hotel website was offering them $36 per night cheaper than Orbitz.
And, the hotel website was $20 per night cheaper than booking through Kayak via the Expedia Affiliate Network behind the scenes, Hotels.com and ReserveTravel.com.
It indeed pays to shop around, and you can find significant rate variations when you do.
Other ways to find hotel deals
And, there are myriad other ways to find hotel deals, from Groupons to deal newsletters and opaque sites where you know the room rate up-front but not the hotel identity (Hotwire) or submit a bid and learn the name of the hotel later if it’s accepted (Priceline).
And, of course, you can always call the hotel or Getaroom.com, and you may be able to negotiate a rate that’s cheaper than what’s touted online.