Hotel Online 
News for the Hospitality Executive


 
Travelers, Hotels Duel Online Over Rates; Hotels
Boosting Rates with Minute by Minute Tactics

By Marice Cohn Band, The Miami Herald
Knight Ridder/Tribune Business News

Feb. 18, 2005 - Browsing Expedia.com on his laptop at Starbucks, Angel Vazquez found a good price on a hotel room for this week's jam-packed Miami boat show. But the deal didn't last long -- Vazquez made sure of that.

"The question I ask myself is: Do I have an opportunity to raise rates?" the 31-year-old explained a few days later at Tecton Hospitality, which pays Vazquez to set prices for three small Miami Beach hotels the company runs.

As a result, Vazquez spends his days -- and nights and weekends -- trying to stay one step ahead of South Florida vacationers.

It is a mission that reflects the shifting landscape travelers face when booking online. And it reveals many of the tactics hotels will be using this tourist season as they boost rates with gusto and finally retire the post-9/11 discounts that plagued the industry for the last three years.

"So much profit can be left on the table," Hyatt Vice President Victor Lopez said. "If you're not managing your room inventory, they're all going to sell at the lowest rate possible."

Vazquez hands over rooms to travel agencies like Expedia to boost occupancy, then snatches them back once bookings hit a high mark. The former desk clerk will raise or lower rates on a single room as many as a dozen times in a two-month stretch trying to predict demand curves the way a stock trader bets on Wall Street.

And when he's left with too many empty beds, Vazquez will dump unsold rooms onto discount sites like Priceline.com, where the bargain-basement prices at least will prevent a total washout for the night.

"The most exciting part about this is being able to forecast and anticipate trends that are going on," Vazquez said while perusing a computerized spreadsheet at his cubicle in Tecton's Miami office. It contained occupancy rates, overnight bookings and revenue targets for a given day at one of his hotels, as well as how the property fared on the same day last year.

After the 2001 terrorist attacks plunged the travel industry into a tailspin, hotels discounted with a vengeance to fill beds. That included handing over large blocks of rooms to online travel agencies like Expedia, which typically charge hotels a 20 percent commission.

A rebounding economy has hotels trying to reverse that trend and drive online bookings to their own sites. The rates usually aren't very different -- Expedia and other sites will bury a listing for a hotel that offers significantly lower prices on its own site. And with online travel agencies accounting for 54 percent of room bookings last year, hotels need to set their rates as low as possible on those sites to compete.

That leaves hotel executives like Vazquez trying to manipulate where guests book their rooms. He is under pressure not to give too many rooms to online agencies, where per-room profits are much lower.

On a recent afternoon, Expedia showed no rooms available that night at Circa 39, a Tecton hotel. But Vazquez's screen showed occupancy at only 70 percent.

The explanation? To sell so many rooms at the last minute, Vazquez needed to slash prices. But he didn't want Expedia visitors to see such a dramatic price dip and then wonder why they had to pay so much more on other dates. So he gave rooms to Priceline.com, where shoppers do not see a hotel's rate until they have agreed to book a room there.

Big events, like this week's Miami International Boat Show, present a different scenario.

A rebounding travel market has already pushed up rates dramatically. Smith Travel Research says room rates are up between 13 and 15 percent in January from a year ago for Miami-Dade and Broward, and 4 percent in the Keys. Add a surge of visitors for a major event, and hotels simply have to figure out how large of a premium they can charge.

Once Jimmy Buffett announced a concert Saturday at the Office Depot Center in Sunrise, the nearby Sawgrass Mills Crowne Plaza started hiking prices. Rooms going for $130 a night soared to $270 as Parrot Heads scooped up rooms.

Vazquez -- who also sets rates at the Wave and Aqua hotels for Tecton -- adopted a similar strategy that Sunday afternoon at Starbucks. In between sips of cappuccino, he noticed a spike in bookings for boat-show week and promptly added $25 to the already high $250 rate Circa 39 was charging.

The price hike meant travelers could find better deals at similar hotels, but Vazquez figured the competition would raise rates soon enough. A few days later, Circa 39 was all but sold out.

"That's the best thing about it," Vazquez said. "Beating everyone to the punch."

-----To see more of The Miami Herald -- including its homes, jobs, cars and other classified listings -- or to subscribe to the newspaper, go to http://www.herald.com.

(c) 2005, The Miami Herald. Distributed by Knight Ridder/Tribune Business News. For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com. IACI, PCLN, IHG,

 
advertisement 
To search Hotel Online data base of News and Trends Go to Hotel.OnlineSearch
Home | Welcome| Hospitality News | Classifieds| Catalogs& Pricing |
Viewpoint Forum | Ideas&Trends | Press Releases
Please contact Hotel.Onlinewith your comments and suggestions.