I just got back from 4 nights in Boston and stayed at a very nice flagged 3 star hotel.  My room was large, furnishing a bit dated – but a very good location and a stunning view of the sun setting over the Charles River.

The best hotel web rate I could book was $136.00 per night plus tax.

Booking through Priceline – I paid $55.oo per night plus tax/fee. I knew approximately how much to bid by checking some of the websites dedicated to ‘breaking the code’ at Priceline where this hotel was well known as a consistent Priceline opportunity.

If I had gone to the website and found a reasonable website instant purchase of $99 or $79 or $69 – I probably would have booked direct and the hotel would have received significantly higher revenue then the net rate Priceline paid (which has to be less than $55/night).

Part of Merchandising a hotel property is to develop a pricing strategy that sets competitive rates and communicates the value of the property to potential guests. Instead of converting this ‘looker to booker’, this hotel’s website pricing sent me running to Priceline instead of even considering a direct booking.

Priceline and Hotwire are still important distribution channels – but when there is such a large difference in rates, hotels often have an opportunity to increase revpar by offering value directly to their guests.

This also builds repeat client loyalty and avoids the ‘dumb sucker’ syndrome where loyal guests who paid full rack rates feel stupid when they meet someone in the elevator or lobby bar who is more than happy to brag about the great rate they found.