Hotel chains want you to believe that the lowest rates are available on their own website. That simply is not true. Hotels chains want to ensure that most of the cheapest online rates are available on their own website. However hotels want to price discriminate.
The basic idea is the same as with airlines. A hotel wants to sell a room for the most money possible to each customer. However they also want to fill up all of their rooms.
- Once a calendar day passes, an empty room can never be resold.
- It doesn’t take very much cost to clean and service a room.
- So almost any money they get for a room that would go empty is net revenue.
Hilton JFK
However they need to be careful not to undercut their own pricing. They don’t want to offer a room they know will go empty for $50 when a customer is willing to spend $100 for it. As a result they offer different pricing through different channels.
In most businesses the lowest prices are online. Not so with hotels, at least not for rooms marketed separately. Hotels will often offer cheaper rooms to “niche channels, such as ethnic offline travel agents, tour operators, and airline websites” (for vacation packages).
- They’ll stipulate that the rooms cannot be sold on a standalone basis on the web for less than the prevailing rate. Sometimes companies resell the rooms online, even to other booking sites. That’s bad for hotels because if these ‘offline’ rates go online, they become publicly available, customers who are searching for rooms pay less than they’d be willing to pay and comparison sites drive down pricing across the board.
- Hotels want to keep pricing as opaque as possible. Vacation packages are a great example of selling rooms cheap. By ‘bundling’ a room with a car rental or flight, the price of the room is never actually disclosed. The hotel sells the room for less, on the condition that no one tells the consumer how much the room actually cost.
- Some storefront agencies can sell rooms for less, too, provided they don’t advertise the price online.
Renaissance Newark
Individual hotels may even give cheaper inventory to third party sites, especially in foreign markets, and ‘disguise’ the room with an add-on like breakfast that makes it no longer eligible for hotel best rate guarantees. Remember best rate guarantees are marketing gimmicks meant to be able to market the claim that a hotel website has the best price, not to actually ensure they do (just to ensure the best public online, chains fine hotels for violating this).
When a chain requires you to book a prepaid room rate before even submitting a best rate guarantee claim, that the chain may try to wriggle out of on a technicality, you know the best rate guarantee offer is a scam. When they deny a claim for a cheaper room because the cheaper room also gives you breakfast, or because it’s on a website you first have to sign up for (free) you know it’s a scam.
The truth is that hotels do regularly sell rooms cheaper through third parties than they do on their own website, they just work really hard to disguise it and to gate off consumers from accessing those cheaper rates – because they want to fill incremental rooms that would go unsold, but without undercutting the prices they can book the rest of their rooms at.
Marriott Key Bridge, View From Club Lounge
Of course if you book a cheaper room through a wholesaler don’t be surprised when you get the wholesaler room like I did at the Marriott Key Bridge.
The information is this post is generally accurate, but you’ve tainted it by calling it a “scam” in the title. I’m sorry, but there’s no “scam” here, especially since it is true that the hotels own website generally DO offer the best rates publicly available in most circumstances. Without going through heroic efforts — or just getting very lucky — you’re unlikely to find a published room rate lower at an online travel agency than from the major hotel chain itself. You are correct that the application of “best rate guarantees” don’t work very well. I only do it when I think I can get an extra 50 bucks off or something by arguing that the hotel’s own rate is something like 5 bucks more expensive. I would say I fail to convince the hotel chain of the correctness of my position 90% of the time, even though I am right about the difference almost 100% of the time! There’s always a loophole, real or invented, to worm out of honoring the guarantee.
One of these days some Attorney General of a State is gonna cotton on to this “Best Rate Guarantee” and realize the big chains are marketing this and it is a big scam. I hope he or she then figures out a solution and forces these chains to change.
@chopsticks if you’re right ~100% of the time, but are only successful 10% of the time that, by definition, is a scam.
Gary,
Do you have any recommendations for ethnic offline travel agents that we could use to try to find the cheaper rooms? Or third party sites in foreign markets (especially since many top credit cards do not have foreign transaction fees)? This information would be very helpful.
I got a Hilton Best Rate guarantee after only two back and forth emails for a room that was advertised on Agoda.com. AND it was a double bed room and the room I booked was a king, so they had a easy out to deny me. Maybe it’s in my file now to “never give any leniency with best rate guarantees” since that was my first one, but it didn’t take a lot of arm twisting to get a check for $287 in the mail.
@ Johhny — Well, it’s depends on how you define a “scam.” It is difficult to qualify for a promotional best rate bonus when you find a trivial difference in hotel rates. Basically, the customer tries to scam the hotel chain by finding a trivial difference, and the chain scams the customer right back by making up an excuse for not issuing the award! Maybe you can get upset by that behavior, but I can’t. It’s extremely rare to find a situation where a third party website offers a MATERIALLY better apples-to-apples rate on a chain hotel. If you found one of those, the odds are good that the hotel chain would “pay up” on their best rate guarantee.
@chopsticks: it is indeed a scam if a hotel says “Best Rate Guaranteed” full stop then make it impossible to actually enforce that promise.
One case in point (of many): Hotel Pitrizzia in Porto Cervo. had a simple “Best Rate Guarantee” on its website which popped up when I looked at reserving a room for the same night. I then looked at the location on google and saw google was offering the same room for much less. I looked carefully at the terms of the guarantee and it was ironclad, so I booked it because I foolishly thought it would be better to book directly with the hotel, and anyway they would match the price.
I then went to the page on how to obtain the benefit of the guarantee and you are required to submit the form within a day of finding the better rate (check) and at least 24 hours before check in (what?). So I called them to say surely this doesn’t apply to same day bookings and they said yes it does.
So they are basically hiding the fact that the guarantee doesn’t apply to same day bookings in the claim filing requirements. Saying “Best Rate Guaranteed” instead of “Best Rate on Advanced Bookings Guaranteed” is highly misleading. Popping up that claim when you are booking a same night room is best known as a “scam”.
And by the way, on another occasion I had screenshots of each step proving that google was allowing me to book a Starwood property less that their booking price, and they would not let me send them the screenshots because they might be doctored. OK I said, just pull it up yourself, and they said they couldn’t find the same rate. That’s another sort of scam, called the computer peripheral rebate scam, where they make you send originals of various documents and then claim you forgot one.
Honestly the big chains have devolved into such scam pricing — call it what it is — that I never ever pay for rooms there anymore. I only use points. And even then sometimes you get bait-and-switch.
SeanNY2 Marriott screwed me on that one too.
Gary, thanks for continuing to call out these companies rather than drinking their kool aid.
I just got scammed too…. Because made claim within 24 hours of check-in. And I really only wanted to support Mariott website use, because I thought I loved Mariott. My wife books on Hotels.com which was just $20 cheaper. I said, no, let’s support Mariott use… they have such good service, they will certainly match the rate. I learnt my lesson. Never again……..if Mariott thinks it is worth misleading in this way, you have lost my loyalty. Shameful. Will cancel credit card as soon as feasible too.
I think we need to put a bit of industry knowledge into this discussion. Everyone here seems to be operating on enthusiastic hearsay.
There is actually something called Rate Parity which is a condition of most hotels working with third party resellers. This means that rates are to be offered to everyone at the same rate, in interest of fairness. It is when third party resellers dip into their commission percentage to undercut the brands that rates look cheaper.. however, buyer beware, it is usually as the rooms are redistributed from big names to their subsidiaries (two to three of the big names own all of the online travel agencies) that undercutting occurs.
Buy from smaller sites at your own peril, as they are known to oversell rooms (99% of the time when hotels find rooms have been oversold, it is because these shadier third party sites), not pass on pre-arrival information, make mistakes in room type selection (again, a condition of overselling) and hide costs within the process. There are also a lot of scam sites where credit card details are compromised.
I’ve worked as head of marketing within hotels for 10 years now and in 2023 this is how things work. Globally. Fact.