Hotel Math
For the few of you that were reading this a LONG time ago you may recall my confusion and questioning of airline mathematical principals way back when. Basically, they had leg A to B to C cheaper then just leg B to C by itself, on the same plane. Apparently I need to expand that theory to cover the entire travel based industry though based on my recent experience with hotels. I continue to be baffled, but read on and maybe someone else can explain this basic math to me that I can not seem to grasp.
It has been a few weeks ago now, but the experience was frustrating enough that I filed it away for a blog. I had headed off on a short weekend get away that included plans for taking in the races. It was kind of a minimum planned weekend and especially with the one agenda item to attend the races I had figured cash was going to be better for the weekend in general and hence had checked out most of the cash in the account that my one Visa debit card is tied too. Should not be a problem as most everyone still accepts and even likes good old American green backs.
As I ended up somewhere different then I had intended I started looking around on the internet for a good priced hotel deal in the area close to me. Fundamentally I did not want to spend a huge amount for somewhere to just flop for the evening when the focus of the trip was spending money on more fun things. I found a couple of pretty good deals, but as I pursued I realized the deals were only available via online reservation of the room.
So let me think this through and see if you follow me on this. I go online with a 3rd party vendor and I can get a room for $50.00 a night. Said 3rd party vendor does not charge me any fees for doing that booking, so one has to assume they get a cut of that $50.00, right? Further, as that would have been using a credit card, either the 3rd party vendor or the hotel itself is going to have pay that small percentage off the top for the credit card processing fee as well. So in the end, what does the hotel owner get? I don’t know for sure, but something less then $50.00, maybe $45.00, maybe as low as even $40.00.
Compare that to I walk in to the lobby, obviously interested in staying in the same room as noted above and even confirm that is the room I would like to have. The same room in the lobby, regardless if I am paying in cash or putting on the card, is $71.00. Mentioning the price they have listed through various online outlets is of no avail, as those are online only options. I was even told I could use the ‘house’ computer to make that reservation if I wanted to get that rate. At this point, I am nearly shaking my head in total disbelief.
So let me see if I got this all straight. Same room, no cut going to the 3rd party processor for booking and nothing going to the credit card companies (as I had cash) and you are going to charge me $21.00 more at the best rate here in person? Where is the reasoning in this? I mean, covering the clerks wages? They spent probably almost as much time explaining how they could NOT as it would have taken to check me in. It is not like they were busy with other customers when I walked in the lobby or anything. I would also lay odds on it being a generally low paying position, well below $21.00 an hour.
Cash should be King and get the best discounts if logic were to be applied to any similar situation. It appears that the only ones who get this is the gas stations, on fuel purchases only mind you. But several offer a discount on fuel purchase price with cash versus credit or debit card. And I suppose that is somewhat related to travel and the one thing that will keep title Hotel Math instead of Travel Industry…
May 31st, 2009 at 12:22 pm
Gas all depends on if you have one of THEIR credit cards. If you have a Shell or Exxon card you get a percentage off gas. Same as several of the travel stations such as Flying J and TA. If you have one of their credit cards, you are sitting pretty with 1 – 10 cents off the gallon of gas. Some even have the rewards program for using the credit card they offer which gives many more discounts.
May 31st, 2009 at 3:48 pm
I do the commissions for the online booking at our hotel. The fees stem towards the reservation companies (travelocity, expedia, etc)getting ten percent of the room rate(not including taxes). The company processing the online things gets another set of fees for the service they offer. Perhaps the cheaper deal is due to the increased amount of reservations/bookings a hotel gets from the attention online. As far as the price of a room at a hotel…we want to get the absolute most for your rate. Money from it goes to supplying breakfast(as you know, ours’ is pretty extensive and constantly growing), buying new linens, all sorts of things. No the clerk, who is making less than 21 as you put it, is not getting your 21. Your new mattress or pillow or flatscreen tv or improved wireless service or any number of things…thats where it goes. Depending on the weekend (memorial day, other holiday) there is absolutely no way we’re allowed to come down on price because the owners know the room will sell. If its during the week or on a nonholiday weekend, then yes…you could probably get a decent rate, because a sold room is better than one sitting empty.
December 24th, 2009 at 7:11 am
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