Viva Priceline!

Priceline gets my hero award of the day as they've announced the elimination of customer-side booking fees for "published" hotel inventory. This follows the reduction of all airline booking fees awhile back. More specifics from today's press release:

"The three fee chops announced today are:

1. Priceline has permanently lowered its booking fees for all published-price hotel reservations.

2. Priceline will no longer charge a fee to cancel a published-price hotel reservation.

3. Priceline will no longer charge a fee to change a published-price hotel reservation.

Almost all other major online hotel reservation services continue to charge as much as $25 in change/cancel fees for certain reservations. Today’s fee cancellations by Priceline do not affect change or cancel rules that may be required by specific hotels."

I put "published" in quotes for a reason. That's to explain that Priceline really sells two types of hotel product.

One is the "name-your-own-price" product where you (surprise!) name the price you are willing to pay for a given city/neighborhood, quality level, etc. What you don't know is the specific property or brand you are bidding on. You give your credit card details when you bid and if that amount is deemed acceptable, you are then informed of the hotel name and your credit card is immediately charged. Those in the biz call these "opaque" fares or rates (opaque as the customer has no visibility into what brand they are buying until after the purchase is made). Priceline keeps the difference between your bid and the price they pay based on their agreement with the hotel. And, guess what? It's a helluva LOT!

Two is the more published or traditional hotel product where you see the hotel name and price level and your purchase is considered more "off the shelf." Priceline makes either a straight commission from the hotel or keeps a margin very similar to the name-your-own price model described above, but typically a lesser amount.

So, why is the margin typically less on traditional/published vs. name-your-own-price? It's a long story, but it has to do with distributing distressed inventory (meaning inventory that's at risk to go empty and where no one will get paid). Hotels (and airlines for that matter) will sell Priceline distressed inventory at a super low rate if Priceline will keep it out of the hands of last-minute travelers who will pay high rates: the notorious business traveler.

By offering customers "name-your-own" pricing and not allowing the customer to know the exact property name/location before you name that price, Priceline does a fantastic job of keeping that distressed product out of the business travelers' hands.

And, that's why they get to keep more money.

But, back to the press release...the fees that Priceline has eliminated involve the second type - or traditional/published - hotel product. And, it's all good!

You know, I list Priceline as the only big OTA (Online Travel Agency) in my links area for a reason. If you are booking basic air and hotel at Expedia, Orbitz or Travelocity instead of Priceline, you are probably paying too much! There are no customer-side service fees at Priceline and they can even beat some of the airline sites as those sites have added some secret fees (but that's a whole other post). You should definitely pay Priceline a visit when researching best rates. Trust me - and no I don't work there and never have. Actually, I spent years at one of the other guys... Booking other travel (cruise, packages, international stuff), it's a different story. But for simple US air and hotel, you definitely should stop by Priceline.

And, for heavens sake, look at the total price of what you are buying, not what they show you on the first screen! That's a golden rule for every travel website.

Well done Priceline, your "trust factor" has gone way up with me today! Also, please keep Shatner on forever, I freaking love his cheesy spots. Best adverts in the biz!

And, if NoFee ever quits, call me. I look just like him...

Priceline announces a trio of fee chops for its hotel service [Press Release]
Priceline.com [Official Site]