The Insanity of Hotel Rates: Hospitality’s Tower of Babel

The Insanity of Hotel Rates: Hospitality’s Tower of Babel

By Robert McGarvey

Used to be, at a hotel the rate was the rate and it pretty much stayed the same for a season. Sure, weekends often were priced differently than weekdays, and maybe there were dips or rises around holidays.  But as a rule rates were static.

Then hoteliers, maybe 10 years ago, heard about the successes their airline brethren were having with yield aka revenue management where the price of a seat could and did sometimes change minute by minute.

Hoteliers, smelling profits, wanted some of that so they dove into revenue management too.  But what they have created – in many cases – is a Frankenstein’s monster, a confusing, offputting mishmash of rates.

This paragraph from a recent piece in the Irish Independent smacked me: “A double room at the Premier Inn County Hall in central London on June 28 was €75 cheaper on the hotel’s website than on Booking.com. The hotel’s website was actually €20 cheaper than the price quoted when we rang up the hotel directly.”

What’s that? Three rates for the same room?

The Indo writer continued: “When we tried to book a room for a family of four for two nights in Randles Hotel in Killarney in mid-July, on Booking.com we were only given the option of taking two rooms for a total of €887. But when we looked up the hotel’s own website, and also when we rang up, we were offered a family room for €516.”

I am now looking at a hotel in Sedona, AZ. On Booking.com the rate for two nights in late June is $880 ($440 per night).  On the hotel’s website the rate was a jaw dropping $534 per night ($1068 for two nights).  Hotwire showed the same room at $414 ($828 for two nights).

I am sure if I called the hotel I could get another rate – actually probably two once I said to the first number, “Is that the best you can do?”

Five rates for one room?

A prospective guest has every right to be frustrated and annoyed by this rate Babel.

It also is fundamentally different than what we experience with airlines. With airlines the rate changes with high velocity, but the rates – in my experience – generally don’t differ significantly from channel to channel.

With hotels, rates very much do differ from channel to channel and that puts the prospective guest in a bind: in order not to feel ripped off, he/she now has to look up rates on multiple sites including the hotel’s own and maybe even include an oldfashioned analog call into a call center too.

That’s a lot of work but when you see how much variation there can be in pricing, you feel obliged to do the work.

Why is there so much price variation? My guess is that it’s mainly a function of bad software and bad communications from platform to platform.  Rate parity clauses in many online travel agency contracts make it unlikely that there are intentional differences.  Booking.com would be miffed that Hotwired had the same room at that Sedona hotel at a better rate. So, for the record, did Expedia.

I also think that there may be a talent vacuum in revenue management, especially at independents and very small groups. Large management companies and big chains have invested in the people and software to do systematic revenue management.  That is not necessarily so at small places.

But here’s the reality: what I want is to know where is the best place to book a hotel room and, frankly, I do not want to spend 15 minutes doing what I ought to be able to do in two.  

Make me a promise: this rate is the best available rate and some chains are doing exactly that. Marriott, for instance, says that if you find a better rate it will match it and take another 25% off. In limited tests, too, Marriott in fact offered the best rate – much better than what I saw on the OTAs. For instance: A room at the Algonquin in Manhattan showed at $398 on the Autograph Collection website, but $479 at Hotels.com and $489 at Booking.com.

I know where I am looking when next I want a Marriott room.

That means hotels can do this.
They just have to want to.

If we complain loud enough about rate Babel, hoteliers will get the message.