Third party hotel booking scam

Let this posting be a warning about third-party hotel booking sites. Let me say that not all of them are bad and they can provide a service in some situation in terms of helping find and select a room.

However, when you know what specific hotel you want, but don't know the hotel web site, it can be easy for a third-party booking site to be listed first in the search and come off as the actual hotel. For example, consider this search for the Longhorn Hotel & Casino in Las Vegas through Google. Note that reservations.com pops up before the actual Longhorn.


Click on any image for larger version.

Clicking on Reservations.com, the customer is led to believe the room price is $38.



However, here is what you see when you click to reserve it. I can understand taxes, but what's this $19.99 service fee.



This $19.99 fee is non-refundable, as you'll see if you click the arrow by "Room cancellation policy, hotel information and fees."



What happens if you book directly at the Longhorn? Here is their screen. Same $38 room price, but no third-party service fee.



I could also rant about the $7.90 "amenity fee," but I've been ranting about hidden resort fees and how they should be illegal for years and won't go into that here.

I'd also like to add that it has happened to me a few times that third-party booking sites simply never passed on the reservation to the hotel and the hotel subsequently booked up.

I fell for this myself a few months back. Fortunately, I was able to get a full refund from the company, no questions asked.

I use third party booking sites all the time. I will look at 10 to 20 different sites trying to find the lowest rate. With hotels many times you can find a consolidator that has a block of rooms reserved selling for less than the hotel.

I have also found lower rates very often when using a site based in another country. Book through U.K., Germany, Spain, etc.

Quote: DRich

I have also found lower rates very often when using a site based in another country. Book through U.K., Germany, Spain, etc.

Care to name one?

I was intrigued by the word "scam" in the title. But what's the scam?

Paid ads usually do show up first in searches. You can't tell the difference between a third party site and a hotel's actual site?

Quote: AlanMendelson

I was intrigued by the word "scam" in the title. But what's the scam?

Paid ads usually do show up first in searches. You can't tell the difference between a third party site and a hotel's actual site?

That reservations.com site is almost certainly breaking google adwords terms and the terms of their relationship to the hotel, by bidding on the keywords "Longhorn Hotel". It's quite a common (sneaky) trick to get their ad shown even above ads from the hotel. It's only lightly policed by google adwords. It's a scam to the extent it's 'Passing off' to the casual observer.

Quote: OnceDear

That reservations.com site is almost certainly breaking google adwords terms and the terms of their relationship to the hotel, by bidding on the keywords "Longhorn Hotel". It's quite a common (sneaky) trick to get their ad shown even above ads from the hotel. It's only lightly policed by google adwords. It's a scam to the extent it's 'Passing off' to the casual observer.

It's Google's business model to put paid ads first. That's how it makes money.

There's no scam here.

Quote: Wizard

Let this posting be a warning about third-party hotel booking sites. Let me say that not all of them are bad and they can provide a service in some situation in terms of helping find and select a room.

However, when you know what specific hotel you want, but don't know the hotel web site, it can be easy for a third-party booking site to be listed first in the search and come off as the actual hotel. For example, consider this search for the Longhorn Hotel & Casino in Las Vegas through Google. Note that reservations.com pops up before the actual Longhorn.

***NOTE: Not the entire post has been quoted, primarily so I'm not reposting the same pictures again, but some words were also clipped.***

I agree with Wizard on this one, though some TPW's can be useful. If you own a hotel or work in the industry, they've kind of become a necessary evil because they have their own rewards programs, (sometimes) so they generate loyalty with certain guests as a result. For example, some people would just automatically go to Hotels.com when they want to book a room.

The booking sites will also occasionally have, "Package deals," by which you can book a room, flight and rent a car all in one place. More often than not, (based on when I have looked) the guest would actually save money by doing all three of these things separately COMBINED with looking for the best deal at each of the three entities. However, it is often cheaper to do this than take the, "Rack," rate of the hotel, the standard fare for the flight and whatever term the industry uses as the basic price for renting a car.

Anyway, this is the first I think I've seen of a, "Service Fee," which seems to be for no purpose other than booking the room. Most TPW's (when I worked hotels) were compensated in one of two ways:

1. They would give us (the hotel) a, "One Shot," credit card and we would be showing a rate in our system less than what they charged the customer. Naturally, we were not to tell the guest what the hotel was getting paid. However, what we would get paid was generally just our rack rate less 15-20% depending on whether or not we wanted to pay a little bit of a higher percentage for better placement on the area searches.

2. In some cases, the hotel just charges the guest directly and receives a monthly invoice from the TPW for how much they are owed. Honestly, this method is more of a hassle (for the hotel) than it is really worth, because then you have to take the time to cross-reference all of the guests they are billing you for and make sure that all of those guests actually stayed there. Usually all guests who booked will be on this invoice, even if they would later go on to cancel the reservation. Obviously, you do not want to be paying commissions on a guest who did not actually end up staying there.

WHEN TPW BOOKING CAN BE USEFUL:

If you're really willing to put the time into it, TPW booking can be useful if you're willing to scour all of the TPW sites looking for the best price for a specific property. This becomes even more true with independent hotels or hotels that are not part of major franchises.

The reason for that is because the independent hotels or small franchises often have to communicate with each TPW directly (either changing rates online or by phone) in order to change the rates for specific days. If the hotel forgets to do that at one or more sites, then you might be able to find their standard, "Nothing is going on this weekend/weekday," rate and get their regular rate on what would otherwise be a, "Special event," weekend or weekday.

If you're booking a hotel at a major franchise, while I am sure there are exceptions, there will often be no real benefit in using a TPW for this purpose. Most major franchises enforce a concept known as, "Rate parody," which means that, after discounts, the hotel is not permitted to offer a lower price on a TPW than would be the cost to guest on a franchisor's own site. Also, any rate changes I did on our systems would reflect on TPW's basically instantly.

Another thing that you can sometimes do if you see a lower rate is to then call the hotel directly and tell them the rate you found on a TPW, at which point, the hotel will often match that rate on a direct booking. This can be beneficial because, by booking directly through the hotel, you will often get a more favorable cancellation policy. The hotel also likes this because they are cutting out the middle man and also probably making more on the room than if the guest had used the TPW. When I worked hotels, if you told me you found a particular price on Priceline and it was even a rate within reason, I would match it without even confirming....because even if the Priceline rate was $10 more than that, we'd still be making less money by having the guest book that rate through Priceline.

DOWNFALLS OF TPW BOOKING

1. The biggest downfall is that you will often end up paying more than if you had just booked directly through the hotel. While Wizard found an example of that via some ridiculous service fee, sometimes (in my experience) that was true just by way of the direct rate. Because of the percentage we (the hotel) was eating on the booking, we would often give a higher rate to the TPW's while having a lower rate on the franchise website and an even lower rate than that available if you just called us directly.

The reason why, quite simply, is because we had to pay the booking site a percentage, one way or another. Even if someone booked through, "Our," website, that was even an extra 5% that went to the franchisor on that booking.

2. The second biggest downfall is that the cancellation policies are often more strict than booking directly through the hotel. I couldn't tell you why, other than the site thinks they are entitled to stricter policies than the entity that's actually providing a guest with a room. (Stream of profanity omitted)

Anyway, whether or not they will let you cancel outside of the policy is fairly arbitrary, and if I had to guess, might depend on how often you use their site.

Another thing is that, if they won't let you cancel (meaning, they refuse to even call the hotel and ask), there's nothing the hotel itself can do for you...even though people often think it's somehow the hotel's fault. Anytime a TPW called me for a late cancellation, the answer was almost always, 'Yes,'--especially if we were going to sell out regardless--because TPW guests are more likely to be a PITA anyway. They're doing me a favor by cancelling if I am going to sell out anyway, because I'm also going to almost certainly sell the room for more than I was getting from them.

Of course, if we weren't going to sell out, "REQUEST DENIED!" I'll take the money, thank you. Those are the TPW's cancellation policies, I didn't write them. If the guest had just booked directly, then they may well still be within our cancellation policy, and even if not, we were pretty flexible about late cancellations as long as it wasn't absurdly late. (You couldn't call at midnight and ask to cancel your reservation for that day. Although, if you claimed to have car problems--or something like that---I might offer to cut the charge in half)

Finally, it's possible that you cancel within their window...but then you're counting on them to put it in correctly and ALSO to communicate that information to the hotel if it is one where the hotel has your credit card---as opposed to a one-shot card from the TPW. If the TPW doesn't communicate the cancellation to the hotel, and I have your credit card, you're getting charged. Not my fault. Take it up with them. So, if you do book TPW, I advise first cancelling with them and then confirming the cancellation by calling the hotel directly.

If that happens and the TPW calls me to reverse the charges, (even though THEY failed to communicate the cancellation to me) I'm going to very professionally and politely tell them what to do with themselves. The reason why is because, if the guest did indeed cancel and the TPW forgot to tell us, I know the TPW will eat refunding the guest. They basically have to.

Or, you could just book hotel direct and avoid all of this crap.

3. OTHER LITTLE THINGS:

A. You have to count on the TPW to communicate the booking to the hotel and the hotel to receive it. Some TPW's and independent hotels (or small franchises) still have the TPW fax the reservation to the hotel. I don't even need to explain why this could be problematic. If you are going to book TPW through a hotel such as an independent, then I recommend calling the hotel itself a couple hours later and confirming they received your reservation.

B. On some occasions, you will not qualify for offers/rewards through the hotel itself...and the hotel has/had that option. For example, if you were part of the franchisor's rewards program...then we had to eat an ADDITIONAL 2.5% of the rate that we had to pay to the franchisor itself. Except, you booked TPW, so screw that. We're just going to take your rewards number off of the booking and keep as much money as possible. If you call and complain, we MIGHT put it back, but as of the time I last worked there, we didn't have to.

C. If you have a room complaint, but it's a reservation where the TPW itself charged you, then you're pretty screwed. If you call the hotel or franchisor, then they will refer you back to the TPW to lodge your complaint with them. The TPW will then call me to negotiate a refund or partial refund for the guest, at which point, I will politely and professionally request that they s**k it. Screw them. Screw the guest for booking with them. Screw everyone. If they think the guest is entitled to a partial refund, then let them give the guest their cut of the rate.

Or, you could just book hotel direct and avoid all of this crap.

Seriously. If you had any complaint whatsoever about your room, even if it was ridiculous, I'd usually offer to take 25% off of your bill just to get rid of you. I also would prefer you not lodge your complaint with the franchisor for a variety of reasons.

D. Authorizations galore! Even though the TPW has already charged you, if it's a one-shot credit card situation, then I have no way to charge incidentals to that credit card. As a result, I will have to get a secondary credit card from you (the guest) which I will then preauthorize for the room rate + $100 in case you break anything or the housekeeper goes to clean your room (on the scheduled checkout date and after checkout time) and your stuff is still in there.

Whereas, had you booked direct, we'd already have your credit card...and while our policy said we COULD authorize an additional $100 for incidentals, I usually didn't.

E. Room choice. If you booked TPW, then you are absolutely NOT getting a free upgrade to anything better than what you booked. Further, if I had a room with a minor problem (or one that had been renovated less recently) of that room type, that's pretty automatically the one you're getting.

Also, just about any booking site (even direct) will say that your room type is not 100% guaranteed. If you book TPW, then your room type is 0% guaranteed. Suppose I have a non-smoking room with two queen beds, but then a company comes in and needs that room for some workers...and they want the room for two weeks...well, I hope you like your room with one queen bed and a pull out sleeper sofa, because that's what you're getting. Of course, had you booked direct, I'd never think of it.

So, book hotel direct whenever possible and avoid this crap! If you find a better rate online, the manager will usually match it.

Quote:

I'd also like to add that it has happened to me a few times that third-party booking sites simply never passed on the reservation to the hotel and the hotel subsequently booked up.

Probably, but not 100% automatic. If they're still going by fax, then it's possible that the hotel misplaced the fax. Also, the hotel might have cancelled your TPW reservation and simply claimed to have not received it in the first place because they were able to get a more favorable rate (for the hotel) from someone booking direct.

I'm sorry, but that's just how it works. If you book TPW, you're the first to get your room type changed if I need your room type for someone else. If we're overbooked (or we can get a long-term stay), then you're the first to have your reservation cancelled--by the hotel. Naturally, they'll deny ever getting it.

I never cancelled a TPW reservation, but I have kicked them out of their intended room type. Honestly, the guest fails to actually book the room type they wanted half the time anyway.

And, for the longest time, Expedia's system would electronically put the booking in OUR system, but their system didn't know how to differentiate between smoking and non-smoking because we coded the room types differently than they did. True story. I swear on my life. I'd NEVER move someone from non-smoking to smoking without them asking, but the way the reservation was sent, Expedia was telling us they wanted a smoking room.

AND THEN, Expedia got tired of calling us every time to make sure the smoking/non-smoking was correct, so THEY ASKED US if WE would change the way we code the rooms in our system. What unmitigated gall! I told them to blow me, of course.

Quote: Wizard

Care to name one?

I will often use a service like Trivago that compares the prices from hundreds of different sources. Many times the cheapest will be a foreign company.

Thanks for the insight, Mission! That was a lot of info. It feels like it could turn into an article.

I usually only use TPWs to get an idea of how much rooms/flights/cars cost. And I agree with you -- 99.54% of the time, the price is no better than booking directly with readily available discounts (AAA, AARP, Resident, etc.). And often, booking direct will get me other perks. One chain that I frequent gives free Wifi for booking direct, while TPW bookers have to pay extra.

I did have a question about matching TPW prices. Would you honor pricing from 'opaque' sites like Hotwire? While they don't provide any hotel names before you buy, they often provide enough info to pinpoint which hotel it is. And often their prices are better than the best advertised price on the hotel's website, occasionally much better. So, if i called you and said I see a price of $X on Hotwire, but your best published discounted rate was, say $1.5X, would you give me the room for $X or tell me that that's not your property I'm looking at and to go pound sand?

I'd also be curious to know if bookings through 'opaque' TPW's were treated any differently than other TPW's from the hotels perspective

Quote: Mission146

E. Room choice. If you booked TPW, then you are absolutely NOT getting a free upgrade to anything better than what you booked. Further, if I had a room with a minor problem (or one that had been renovated less recently) of that room type, that's pretty automatically the one you're getting.

Ha! Among friends and family, we have a joke about this -- we call it the "Hotwire Room." As in, "Yeah, they stuck us in the Hotwire Room," which meant that it was right next to the elevator, or at the very end of the corridor facing the interstate, or oddly shaped/smaller, etc.

Quote: Joeman

Thanks for the insight, Mission! That was a lot of info. It feels like it could turn into an article.

Thanks! I could write an article about it, but probably not for here. It would be difficult to relate such an article back to gambling. Although, I have been able to write with a little bit of insight on certain things related to casino hotels, but that's only because certain aspects shouldn't be much different than any other hotel.

Quote:

I usually only use TPWs to get an idea of how much rooms/flights/cars cost. And I agree with you -- 99.54% of the time, the price is no better than booking directly with readily available discounts (AAA, AARP, Resident, etc.). And often, booking direct will get me other perks. One chain that I frequent gives free Wifi for booking direct, while TPW bookers have to pay extra.

Definitely! I pretty much do the same thing, but I don't mind actually calling places, (especially if it's going to save $25+ total over the course of my stay) so I might call and directly ask them to match the rate of the lowest TPW I find, if applicable.

Free WiFi for guests was mandatory for all guests of the property, per the franchisor, so we really didn't have a choice to charge for that. If we could have charged TPW guests for it, then we certainly would have.

Quote:

I did have a question about matching TPW prices. Would you honor pricing from 'opaque' sites like Hotwire? While they don't provide any hotel names before you buy, they often provide enough info to pinpoint which hotel it is. And often their prices are better than the best advertised price on the hotel's website, occasionally much better. So, if i called you and said I see a price of $X on Hotwire, but your best published discounted rate was, say $1.5X, would you give me the room for $X or tell me that that's not your property I'm looking at and to go pound sand?

It really depends. I would generally automatically honor them if I could go to the site and confirm the rate, or if it sounded basically right for that date.

Hotwire is interesting because then I could ask the person what rate they were asking me to honor, and often, they would quote me back a rate that is greater than I would have quoted if they hadn't mentioned a TPW in the first place. I'm definitely happy to, "Match," a rate that is more than I would have charged them to begin with.

Hotwire (at least, for us) was one of the sites that used the one-shot credit cards. Hotwire charges the guest, then we charge Hotwire. The result of that is that they would be quoting the guest a higher price than the hotel would actually be getting from Hotwire themselves. I'm only too happy to match both:

A. More than I would be getting from Hotwire.

B. More than I would be charging the guest in the first place.

So, if you ever call a hotel---don't just ask them to match right away. Get a quote from them first, then only ask them about matching if what they are quoting you is more expensive. It will often be less expensive.

If you asked me to match a price LOWER than what I would give you from just calling me directly and getting a quote, then I would refuse and tell you to book via the TPW. The reason that's true is because I had it set up such that calling me directly and booking through me was the lowest price you could possibly get. If you said anything lower than that, then I would know you were either mistaken or lying.***

***The only exception was people with no plastic who were paying cash. Their reservations were not guaranteed and we charged WAY more for them. We were one of only two hotels in town who would even take cash unless you had some kind of plastic to be authorized for incidentals. It's not because we were the junkiest hotel in town...we were right in the middle in that respect...but because I would charge $120 + tax for a room I'd sell to anyone else for $70.

Quote:

I'd also be curious to know if bookings through 'opaque' TPW's were treated any differently than other TPW's from the hotels perspective

Not really. I hated all TPW's equally. The opaque ones, I think, all used the one-shot credit cards...but even that could be wrong.

Quote:

Ha! Among friends and family, we have a joke about this -- we call it the "Hotwire Room." As in, "Yeah, they stuck us in the Hotwire Room," which meant that it was right next to the elevator, or at the very end of the corridor facing the interstate, or oddly shaped/smaller, etc.

You're absolutely right, but only if we were going to be busy that night. I wouldn't even give a TPW guest an undesirable room just for the sake of doing so, only if I needed the better rooms (or a certain room type) for a more desirable guest.

We had some families that would be passing through the area. You couldn't really hear the elevator too much from any of the rooms. We'd probably stick you next to a room full of kids...since we have to give the family with kids a room somewhere.

The conditions that would make a particular room in the hotel the least desirable on a given night can vary, but in most cases (except only being half full) that is the one that the TPW booker is getting. Also, if the TPW booker made a special request (first floor, facing the road...etc.) they just guaranteed that the request would not be fulfilled. I would go out of my way to deliberately NOT acquiesce their request.

Quote:

Short Story

About 5 years ago, I booked a room at the Hyatt Regency in downtown STL through LMTClub. This was back before LMTClub became like every other TPW. At the time, it was the 'exclusive' branch of Last Minute Travel, and if you 'paid' (they would often run specials to join for free) to be in their 'club,' you'd get essentially opaque pricing while knowing the hotel name before purchase -- the best of both worlds. Anyway, I booked a really good deal, and was completely prepared for the "Hotwire Room." However, when we arrived to check in (around midnight), they gave us a suite on the top floor!

The front desk clerk didn't say why, or even that we got an upgrade, and I didn't ask. Not sure why that happened, but we were grateful it did.

If I had to guess, my guess would be that they didn't need that room type that night and a long-term stay DID want the room type you booked originally.

For example, let's say that you booked a Queen Suite at $80/night for a one-night stay. Okay. Let's also assume that my jacuzzi kings are probably not going to sell out that night. However, I get someone who wants a room for a week and is happy to pay my weekly rate of $400/week + Tax on the Queen Suite...except you've booked my last Queen Suite.

I don't want that weekly person to have a Jacuzzi room for one night and then have to move to the Queen Suite the next day because that's annoying for everyone. So, I'm just going to put them in the Queen Suite and change your reservation to the Jacuzzi King. You think I'm doing you a favor, even though the truth is I'm still p***** off and hate you for booking TPW....but we're both happy. I'm happy that I got a weekly, and you're happy that you got an upgrade...but I only gave you an upgrade because it benefitted me to do so.

And, that's probably the only reason (which does come up) that I would ever upgrade a TPW. I also wouldn't say anything to the guest about it unless they asked why.

Quote: DRich

I will often use a service like Trivago that compares the prices from hundreds of different sources.

I also use Trivago
their ads are very strong and try to convince you that it's no longer necessary to search anywhere else

but I did - and a couple of times I found better deals on other hotel sites - not better prices but good hotels at good prices that weren't listed on Trivago

At the risk of looking like an idiot…

Mission mentions ‘TPW’ dozens of times without ever stating what that’s an abbreviation for. I kinda get he’s talking about services like Priceline, etc. but what’s TPW?

Quote: DJTeddyBear

At the risk of looking like an idiot…

Mission mentions ‘TPW’ dozens of times without ever stating what that’s an abbreviation for. I kinda get he’s talking about services like Priceline, etc. but what’s TPW?

I don't know either but am assuming the same as you.

Third Party Website

Quote: OnceDear

Third Party Website

The search engine thing happens with airlines sometimes too... Then people call them up not realizing it isn't the actual airline, give them their account and flight details, etc.... Sometimes they just end up paying extra fees but it's risky in other ways too giving out that info.

Quote: ECoaster

The search engine thing happens with airlines sometimes too... Then people call them up not realizing it isn't the actual airline, give them their account and flight details, etc.... Sometimes they just end up paying extra fees but it's risky in other ways too giving out that info.

That's also an excellent point, which is true for hotels in situations where the TPW forwards the guest's credit card information to the hotel. Instead of one database having your credit/debit card information, (had you called and booked directly) there are at least two.

Quote: AlanMendelson

I was intrigued by the word "scam" in the title. But what's the scam?

The scam is slipping in the $20 service fee at the last step for a service that most competitors do for free. I'm sure you'll say "buyer beware." I agree with that, but also feel sites that overcharge people too lazy to do their research should be shamed.

Quote:

Paid ads usually do show up first in searches. You can't tell the difference between a third party site and a hotel's actual site?

Keep it up.

I don't travel as much as in the past, but I never really cared for booking through TPWs - third party websites (or OTAs - online travel agencies) for hotels. I know people can and do save $$ by doing it (I also used to do it a lot in the past - long story). The savings imo do not justify it for me anymore. I generally book hotels direct mostly for loyalty program benefits (points/upgrades/customer service/changes and cancellations/price guarantees).

Many of these OTAs are owned by just a few companies from consolidation over the years.
Examples being Bookings Holdings (old Priceline.com) and Expedia Group:
https://en.wikipedia.org/wiki/Booking_Holdings
https://en.wikipedia.org/wiki/Expedia_Group

I’ve used Hotels.com for years and had good experiences. Reservations are easy to make (and easy to cancel if you choose a property with a generous cancellation policy). Easy to search and filter. Hotel reviews are fair in my opinion.

Keeneone makes another great point!

With exception only to the day of check-in, if you could find a lower rate anywhere online (or on our own site) and you asked me to match that rate, I’d do it without hesitation. But, that only applies if you book directly through me...I’d sometimes at least think about it if you booked via the franchise website(s).

Why not the day of check-in? Because if I had a group cancel (or walk-in traffic for an event wasn’t as expected) I would obviously drop the online rates by a good bit and take whatever I could get, especially after 7:00p.m. Leading up to the day that was booked, the only thing rates would do is go up nearly 100% of the time (supply and demand with supply dropping) unless I had a group cancel, or something.

Groups generally had a different cancellation policy as part of the group contract, so they were almost certainly getting charged SOMETHING anyway. Usually half. So, if I could sell the rooms for half of what they would have paid, or more (usually more), the hotel did better than had the group actually stayed.

Quote: TinMan

I’ve used Hotels.com for years and had good experiences. Reservations are easy to make (and easy to cancel if you choose a property with a generous cancellation policy). Easy to search and filter. Hotel reviews are fair in my opinion.

I guess I should correct my statement about hating all TPW’s equally. I hated Hotels.com slightly less than the others because the way they managed things was generally reasonable for both hotel and guests.

They still rake in a ton of money for doing almost nothing, though. Even the property pictures and descriptions they lifted straight from our site.

Mission, I was just wondering and if you are comfortable talking about it, what would be the lowest rate you could give and still make a small profit on a typical walk-in at night if you still had rooms available?

I am assuming you worked for a middle of the road chain hotel franchise.

Quote: DRich

Mission, I was just wondering and if you are comfortable talking about it, what would be the lowest rate you could give and still make a small profit on a typical walk-in at night if you still had rooms available?

I am assuming you worked for a middle of the road chain hotel franchise.

Slightly lower than middle of the pack, but probably a middle of the pack overall franchisor. I worked at an economy hotel that I would say was better than some, worse than others. We were on the lower end (franchise) of the franchises (hotel chains) of this franchisor.

Your question depends on a lot of different factors and is kind of a loaded question. I would say you’re better off to rent a room as opposed to not renting it at about $25, assuming you kept it, “Out of the computer.”

That wouldn’t make the hotel profitable, though, because of costs not directly related to that specific rental. Also, we’d obviously almost never rent a room at that rate. We’d sometimes do it if someone was broke down, homeless, too drunk and the cops asked for a favor...and we’d ask all involved not to tell anyone about it.

If we could theoretically have sold every room, every night, 365 days a year...we would have probably been slightly profitable at $40/night, even putting them in the computer, as long as none are TPW’s. That refers to the industry term REVPAR, which means, “Revenue per available room.” Of course, our REVPAR was actually higher than this, we did not sell out every night of the year and we were more than minimally profitable.

Quote: Mission146

Slightly lower than middle of the pack, but probably a middle of the pack overall franchisor. I worked at an economy hotel that I would say was better than some, worse than others. We were on the lower end (franchise) of the franchises (hotel chains) of this franchisor.

Your question depends on a lot of different factors and is kind of a loaded question. I would say you’re better off to rent a room as opposed to not renting it at about $25, assuming you kept it, “Out of the computer.”

That wouldn’t make the hotel profitable, though, because of costs not directly related to that specific rental. Also, we’d obviously almost never rent a room at that rate. We’d sometimes do it if someone was broke down, homeless, too drunk and the cops asked for a favor...and we’d ask all involved not to tell anyone about it.

If we could theoretically have sold every room, every night, 365 days a year...we would have probably been slightly profitable at $40/night, even putting them in the computer, as long as mine are TPW’s. That refers to the industry term REVPAR, which means, “Revenue per available room.” Of course, our REVPAR was actually higher than this, we did not sell out every night of the year and we were more than minimally profitable.

Thank you, I would have guessed between $20 and $25. I would assume the cleaning cost would be the largest part of that expense. If you put out a "free" continental breakfast I would guess that would be the next biggest expense.

Quote: DRich

Thank you, I would have guessed between $20 and $25. I would assume the cleaning cost would be the largest part of that expense. If you put out a "free" continental breakfast I would guess that would be the next biggest expense.

You’re welcome! You would have guessed correctly! I’d put the usage of electric, water and amenities over continental breakfast for the second greatest expense associated with the rental, in terms of direct costs. It’s honestly pretty close, though, and the guest might not use very much of any of those things. I guess breakfast could exceed if they really loaded up, but we offered the bare minimum that the franchise would permit in the cheapest possible way.

Quote: Joeman

we call it the "Hotwire Room." As in, "Yeah, they stuck us in the Hotwire Room," which meant that it was right next to the elevator, or at the very end of the corridor facing the interstate, or oddly shaped/smaller, etc.

It's always a delicate balancing act between being away from the elevator, on a very high floor, on the "right" side of the building for the best view, and getting the type of room or suite you want. And still then sometimes they come back with "that's where all of the suites of that type are located." Or you get everything you think you want and end up in the room next to the screaming infant.

For example at Encore, all of the parlor suites face the golf course - no Strip view.

And at Cosmo, all of the Terrace Suites are located relatively close to the elevator hallway.

The list of "quirks," as in - you want this, well then you have to put up with or sacrifice this - go on and on for many if not most hotels worldwide.

Quote: MDawg

It's always a delicate balancing act between being away from the elevator, on a very high floor, on the "right" side of the building for the best view, and getting the type of room or suite you want. And still then sometimes they come back with "that's where all of the suites of that type are located." Or you get everything you think you want and end up in the room next to the screaming infant.

For example at Encore, all of the parlor suites face the golf course - no Strip view.

And at Cosmo, all of the Terrace Suites are located relatively close to the elevator hallway.

The list of "quirks," as in - you want this, well then you have to put up with or sacrifice this - go on and on for many if not most hotels worldwide.

In your first paragraph, that’s often actually true and was true for us.

On the second and third floors, if you made a left off of the elevator, that’s where all of the rooms with two queen beds were located. If you made a right, Queen suites would be on the left side of the halls with the different types (Jacuzzi or no Jacuzzi) of king suites on the right. The, “Singles,” which had just one queen bed and no frills, were right across from the elevator—three per floor.

Smoking was the entire third floor and no other floor had smoking rooms.

The first floor was basically the same, except there were no jacuzzi rooms and rooms with two queen beds were on both sides of the hall. The four accessible rooms (two single queens, a king suite and a two queen room) were also on the first floor. That floor also had one two queen suite.

There were also three king rooms that were not suites in the hotel. Two of these were smoking rooms and were actually just modified two queen rooms (same thing, but with a king bed and recliner-rocker and table instead) because we simply did not need so many QQS rooms. The other was the room closest to the front desk, which was often used by myself or the owner. If there was a blizzard, or something, and other employees could not make it in, then I’d stay on the property until the weather abated. That only happened two or three times, though one time was for four days. Mostly, the owner hung out in there when he was on the property, though he did not typically stay overnight.

Mission, You said your franchise had a loyalty points program. How did points stays get “handled”? I assume the franchise reimburses the franchise in some fashion. Was there any similar handling of points booking customers?

Quote: drmario

Mission, You said your franchise had a loyalty points program. How did points stays get “handled”? I assume the franchise reimburses the franchise in some fashion. Was there any similar handling of points booking customers?

The franchise had flat reimbursement if the hotel was not sold out that night. Usually the reimbursement was one of three price levels based on, “Demand season,” which was totally arbitrary and decided by the franchisor. These price levels were also ridiculously cheap, in any instance.

The only exception would be a 100% sell out, in which event, the hotel would be compensated 90% of the ADR (average daily rate) for each free night guest that night. The good news is that it was very easy to fake 100% if you were even close. You would just put rooms in as hotel-comped rooms that weren’t actually occupied, you’d put a room or two out of order in the system, etc. And then, if anyone did come in, you’d just check out one of the comp rooms and put them in that...or leave the comp room if it was a person you could rent to, “Out of the computer.”***

As far as the guests staying on points, we treated them well. We REALLY don’t want any complaints going to the franchise that would actually stick, and those definitely would. The only thing was that points guests could not have any of the king suites or jacuzzi rooms, but they could book anything else. That aside, we’d try to make them happy.

The only thing with them that sometimes sucked is that some of them were much more likely to complain anyway. The reason was twofold:

1. They would use their points with us because it took fewer points to stay with us than the higher chains in the group...but they usually stayed at the higher chains in the group. So, they might call the franchisor (after already staying, of course) and complain about the hotel, in general. Most complaints, however, would be about amenities or continental breakfast items that the higher chains were required to have that we were not required to have.

In essence, they’re using their points on a lower hotel grade, but are somehow expecting the same experience as at their usual chain. I’ve never accused most people of being intelligent.

2. There was a time that we were the ONLY hotel of any chains in that franchise for forty miles in any direction. That sucked. We’d have seven or eight free nights stays, at that point, until the franchise gave us a certain number of days a year that we could limit it to two such rooms in a night. I think twenty days per year, or something.

***Not always the case. At one time, it was just the flat reimbursement...but I forget how long ago they changed it to the 90% if sold out thing.

Great info. Thanks!

There seems to be some interest in this topic, so I'll offer a little more on franchises and TPW's.

TPW's and Why I Hate Them

I hate the TPW's because they make a bunch of money for doing basically nothing. There's no real added benefit to them and they have nothing to do with the actual product that the guest is being offered. They pretty much just sit back and make risk-free money.

Another thing that I don't like about them is that they basically extort the hotels for a premium percentage in order to have preferential listing on their websites. What that means is, when the default list for an area/town search comes up, your hotel appears at the top unless the guest hits, "Order by price," "Order by distance," or whatnot. Sometimes, the first recommended hotel will be miles away from the guest's intended destination, if that is the only hotel to pay for the priority listing.

They'll also threaten to remove you from their listings if they don't like your reviews, or sometimes, if they feel like the prices are too high for the chain of hotel you are...which completely ignores supply/demand of a given market. For example, during the natural gas boom, did we have one of the highest ADR's in the country for the chain? Yes. But, we were also 80% occupied, on average, so why wouldn't we have the highest prices compared to some roadside hotel in the middle of nowhere sitting at 25-40% occupancy year round? There was once a three-month period where Sundays were the only days that were not a 100% sellout.

So, then they'll call asking us if we could do something about the rates. Laughable. I would look and see that they brought us five reservations in the last thirty days and say, "No, and feel free to take us off of your website any time you want to. I'm not asking you to do it, but you can go ahead and do it anytime you like."

Even their websites don't have original material all the time. They've never been to the hotel, for one thing. Usually they just lift all of the pictures and descriptions from OUR website. I remember one of the TPW's (I forget which) asked if we would provide more updated pictures. I said, "No, but you can pay a photographer to come and take pictures here anytime you like. Otherwise, I think the franchisor wants new pictures in about two years, so you can wait until then."

Anyway, they are useless and provide no added value. They also think they have some right to ever even ask the property to do anything, without being the entity that gets to eat the costs associated with doing what they want done.

That's why I said Hotels.com was at least reasonable. Aside from wanting an extra percentage for preferential listing, (no thank you) they never asked us for anything.

Franchisors

Franchisors are a necessary evil, mainly because you need the flag. The flag just refers to a recognizable hotel name and sign.

From a guest standpoint, franchisors are also good because of rewards and because you can book all kinds of different areas all in one place.

Furthermore, franchisors usually ensure some degree of uniform standards in a given hotel chain, though some do that better than others and it depends on the chain in question. Even certain franchisors will have more consistent requirements for one chain, but not so much for another chain.

In my experience staying at places, Holiday Inn Express and Best Western tend to be two of the most consistent chains when it comes to the stuff that's actually important. I will also say that Fairfield by Marriott and Suburban by Choice Hotels (mainly for extended stays) are very consistent.

By a mile, Quality Inn by Choice Hotels are the least consistent chain anywhere. I don't know what the hell is going on with their inspections; the only thing I can assume is that Choice Hotels International has forgotten that they are in charge of the Quality Inns. I've seen a few that could be Comfort Inns, easily, and a few others that would be the worst Rodeway Inns in the country...if they were even somehow considered suitable for that.

Costs

Anyway, the benefits to the guests are convenience and consistency, but make no mistake that both the guests and the hotels are paying for those things. Let me give you a rate breakdown on a AAA member stay booked through a TPW.

Rack Rate: $80
AAA Discount 10% ($8.00)
New Rate: $72

TPW Booking Fee (20%) ($14.40)
Effective Rate for Hotel: $57.60

FRANCHISE COSTS:
Any Room 7%--of the $72--until stay exceeds seven days, if applicable): $5.04
Online Channel Fee---Even though it wasn't their channel--5%: $3.60
Franchise Rewards Fee---2.5% (Any guest with Rewards Number put in) $1.80

TOTAL: $10.44

NEW Effective Rate for Hotel: $47.16

Think about that: Before any other costs, the hotel is starting off only getting 65.5% of the already discounted AAA rate. It's less than even that relative to the Rack Rate, but of course there is a AAA discount. That's standard.

However, it's not like this is the only franchise fee. You still have the annual flat franchise fee that you have to pay. Also, imagine that the franchise decides (arbitrarily) to change the logo for your chain, now you have to do this:

-Pay for new billboards
-Pay for new outdoor signage (Very Expensive!)
-Pay to change the highway signs (which can only be done when you renew that contract...which really irritates the franchise though we have no control)
-Buy amenities with the new logo
-Buy towels where the tag has the new logo if you have logo towels (I was not stupid enough to get logo'd tags)
-Go to Staples and make all new hotel services books with the new logo.
-Buy new throw rugs with the new logo (These are required as minimum one for the lobby and one for the elevator floor)
-Change any, "Hard," logos in the hotel---but again, we weren't stupid enough to have anything with hard logos.
-Change all indoor signage
-Get NEW pictures for online that reflect the logo change
-New shirts

And, all of these are very inflated prices. For one thing, there were ONLY four vendors that we were even allowed to purchase some amenities/attire from. The second thing is that we had to use one of their approved photographers for the photos, so that's high-four low-five figures just to get the new pictures taken.

All told, the logo change directly cost us about $25,000 by the time we did everything to ensure full compliance, which you had to, or they would first fine you and then fine you more and delist you from the website. They threatened to delist us over the highway road signs, until I finally prevailed upon them that the company who does them is ONLY willing to change them once per year--when you renew that contract.

Calling Directly

Okay, so you have a guest booking TPW who pays $72.00 plus tax and the hotel gets an effective rate of $47.16 before you consider any other cost at all. Some hotels (mostly those owned by huge companies) are happy just to cruise along on auto-pilot and not put thought into anything, but I tried to put thought into everything.

So, what happens if you call me and book directly?

$64.99 + Tax.

And then, I only have to pay 9.5% to the franchise if they are a rewards member. This results in an effective rate for the hotel that rounds up to $58.82.

Therefore, the guest spends $7.01 less and we get an effective rate that is more than $10 greater than we would have had otherwise.

The problem is that the hotel and the franchisor have a quiet war with one another over these things. For example, they might do a promotion by which a guest can stay three nights within a certain period and will automatically get enough points to get a free night-----the catch being they have to book online. Isn't that cute? The franchise offers a, "Promotion," while making more money from the hotel in the process, because now people are more inclined to book online. Remember, the actual free rooms cost them next to nothing, unless the hotel is 100% sold out.

Worse than that, we were one of the chains where you could use the points, but stays at our chain did not apply to this promotion. IOW, this promotion did nothing but cause more people to book online (hurts our bottom line) and more people to use the free nights with us, which they had more of--which also hurts our bottom line.

And, of course, people THOUGHT that stays at our hotel DID apply...and then decide it's the hotel's fault that they don't. Therefore, the guests who book online complain endlessly to us over something that we didn't control in the first place.

It actually got so bad, that at one point, I would CALL every single guest who booked online to make sure that they understood that their booking did not apply to the promotion. They usually did not know that and cancelled the reservation.

Of course, people still griped about the cheaper rate:

GUEST: How much is a rate for x date?

MISSION: Hmm...looks like a Wednesday, you said two adults, two beds? Sure. I can do $64.99 before tax as long as you don't have any pets.

(For some reason, people would pretend to interpret, "Plus tax," as "Including tax," to try to rip the hotel off---so I usually said, "Before tax," over the phone)

GUEST: What's the Triple-A Rate?

MISSION146: The Triple A rate is actually more than that. Direct calling is the lowest rate possible. The rate is just $64.99, before tax.

GUEST: So, no Triple-A discount?

MISSION146: There is, but our standard rate is $80. Your rate will be $72 before tax if you book with the Triple-A discount online. I'm already offering a lower rate than that, so my rate is better.

GUEST: You HAVE to offer a Triple-A discount.

MISSION146: I do, but that would make the room MORE expensive than the offer I am already giving you. Triple-A applies to the standard rate, which is $80, before tax. If you would like the Triple-A rate of $72 before tax as opposed to my offer of $64.99, I'll gladly give it to you.

QUICK ANECDOTE

I have one last funny anecdote as relates AAA.

Apparently, AAA was getting upset because so many hotels were not verifying the AAA Member number before allowing the guests to have the AAA discount. That was completely true, by the way, though I don't know if it still is. We didn't care if you had AAA or not, if you asked for the discount, then you got it. (In most cases, because it's more than I'd have charged anyway.)

People would come in...and keep in mind I might have quoted them $79.99 + tax compared to a rack rate of $100:

WALK-IN GUEST: Hello, how much are your rates for tonight please? I have Triple-A.

MISSION: Triple-A? Sure. Looks like an even $90 before taxes.

So, thinking that Triple-A is this great thing to have just cost them an extra $10.01 as opposed to just asking for the rate. But, some people think having Triple-A makes them important. They also would receive the worst room of the desired type that I had available.

Anyway, so AAA starts demanding that the hotel actually verify the AAA membership number and put it in the computer. This is basically the equivalent of carding a 70 year old person on a walker when he tries to buy smokes. We (the hotel) don't even care if they had Triple-A.

So, everyone is demanding this. The franchisor was demanding it. TPW's were demanding it. Etc.

So, do you know what we did?

We cancelled their reservations in the computer, put them in as a walk-in and then gave them the AAA rate as if it was the rate we had quoted!!!

In the meantime, AAA notices that all of those savings numbers they like to tout are plummeting...franchisors and TPWs are noticing a drop in online reservations being fulfilled....word can spread pretty quickly in the hotel industry when someone comes up with a good idea that benefits everyone, I guess, because it turns out that a HUGE number of hotels would just cancel the reservations and put it in as a walk-in.

About three months later, we were told not to stress about verifying the AAA number anymore. Just, "Seeing the card," (which we also never asked to see) would be fine.

Great stuff here. I find these third party booking sites to be really weird. They all came around in the 90s and 00s and seemed to serve a purpose then, no reason for them to still be around. They offer no value above what the hotel themselves can offer, yet take a cut.

Quote: TomG

Great stuff here. I find these third party booking sites to be really weird. They all came around in the 90s and 00s and seemed to serve a purpose then, no reason for them to still be around. They offer no value above what the hotel themselves can offer, yet take a cut.

That's exactly right. 100% true.

When it comes to the medium-large chains, the only price competition that exists at the TPW's is amongst themselves. Most differences in price that you see (between the TPW's) generally just mean that some of them are willing to accept a smaller cut from the hotel than others. If my rack rate is $80 and gets booked at a 20% TPW, then the hotel gets $64, end of story. That doesn't mean that they can't offer the room to the guest at $70 (rack rate) but they can't take 20% if they do that.

The least the hotel is permitted to make is 80% of the rack rate, unless there's a discount like AAA, senior, military, Government, etc....in which case, 80% of the rate after the discount.

Thanks for the compliment, by the way!

In case anyone wondered, Government/Military would be the only discount off of rack rate that would be better than what I would instantly quote on a direct booking.

Quote: DJTeddyBear

At the risk of looking like an idiot…

Mission mentions ‘TPW’ dozens of times without ever stating what that’s an abbreviation for. I kinda get he’s talking about services like Priceline, etc. but what’s TPW?

actually, you made a really good point there
I don't mean to criticize Mission
but all kinds of abbreviations are flooding message boards
I'd be willing to bet that half of the people reading these abbreviations don't know what they mean and don't bother to ask
just so much easier to remain in the dark

Quote: Mission146

In case anyone wondered, Government/Military would be the only discount off of rack rate that would be better than what I would instantly quote on a direct booking.

I would have guessed corporate/business rates would have been the lowest (assuming your property offered/honored them).

----------

I think the one takeaway from this thread should be:

Hotels (large and small) actually prefer guests to book directly with them. Use this knowledge to your advantage.

Thanks to Mission for posting all this detailed information and the Wiz for starting the discussion.

I bet Mission gets tilted when those Trivago commercials come on where the guys gets a room for $80 while the lady gets it for $100.

He wants to insert himself and say "you dummies...step over here and you both can get it for $65" 😄

Quote: lilredrooster

actually, you made a really good point there
I don't mean to criticize Mission
but all kinds of abbreviations are flooding message boards
I'd be willing to bet that half of the people reading these abbreviations don't know what they mean and don't bother to ask
just so much easier to remain in the dark

It's all good. I probably just started using TPW, without specifying at least in the first instance, out of old habit.

Quote: Keeneone

I would have guessed corporate/business rates would have been the lowest (assuming your property offered/honored them).

----------

I think the one takeaway from this thread should be:

Hotels (large and small) actually prefer guests to book directly with them. Use this knowledge to your advantage.

Thanks to Mission for posting all this detailed information and the Wiz for starting the discussion.

The standard corporate rate was the same as the AAA rate. We did have lower rates for group bookings or for long stays for companies, in fact, that's pretty much the clientele that we most catered to. In any case, those kinds of rates could ONLY be negotiated through me and those contracts were done on an individual basis with the price based on a wide variety of factors. You're welcome!

That's why people would be surprised that almost all of the rooms had a full size refrigerator and freezer, but we didn't really do that out of concern for the regular guests. That was mainly for the workers that would be staying there for weeks at a time.

Sometimes our negative reviews would talk about, "Shady," people hanging around outside or grilling, but those guests probably didn't realize that they were usually talking about people who were in the area working.

Quote: Johnzimbo

I bet Mission gets tilted when those Trivago commercials come on where the guys gets a room for $80 while the lady gets it for $100.

He wants to insert himself and say "you dummies...step over here and you both can get it for $65" 😄

LOL.

I haven't worked at the hotel since 2016, so it doesn't really matter much to me. Apparently, the place has gone even more in the crapper since I left. I know the current flag is a serious downgrade, but I also know the former franchisor wasn't doing much for us and the new one is much cheaper. You mainly just need a flag for online presence. The majority of our guests were either workers or walk-ins. If we were really busy, we'd actually prefer not to have travelers or, 'Regular,' guests.

In all honesty, the owner is almost completely out of control and most of my day was spent trying to run a hotel with reasonable cleanliness and service without him noticing. You also wanted to keep him away from the guests at all costs because he had a tendency of cussing them out if he felt like they were complaining or said something else that he didn't like.

Quote: Mission146

In all honesty, the owner is almost completely out of control and most of my day was spent trying to run a hotel with reasonable cleanliness and service without him noticing. You also wanted to keep him away from the guests at all costs because he had a tendency of cussing them out if he felt like they were complaining or said something else that he didn't like.

By any chance was your owner of Middle Eastern descent? It seems like all of the mid to lower hotels I stay at have Middle Eastern franchisees. Do you know why that might be?

How good is the AARP discount? It's pretty cheap to join, but I am not aware of any reason to do so, yet.

Quote: Wizard

How good is the AARP discount? It's pretty cheap to join, but I am not aware of any reason to do so, yet.

I have been a member for four years only because it is $16 a year. The only benefits I have used are the free previews to new movies coming out. They seem to have one or two a year where you get free tickets.

Quote: DRich

By any chance was your owner of Middle Eastern descent? It seems like all of the mid to lower hotels I stay at have Middle Eastern franchisees. Do you know why that might be?

Does India count as Middle East? I thought it counted as Asia. Most of them are Indian, from the ones I have seen.

I don't know why they got into that particular segment, or even the industry. I also know that all owners aren't like that because the other hotel I managed (when I was even younger and obviously less experienced) you'd barely even see the owner, despite the fact that he lived on property. As long as the revenues were as they should be, (improving) they pretty much just let me run everything property maintenance and guest related as I saw fit. They did all the financials and I had to get approval for any single purchase over a certain amount, but that was about it.

I say, "They," because they weren't really the owners. There was first one and then a different one, but it was actually owned by an investment company that was mostly family. These people were just called the, "Owner." The first guy got busy with all of the Subway locations he ran and didn't even have the time to handle the financials for the hotel--he was also tired of living there. He moved out and the second guy moved in, but like I said, they mostly just let me run it as I saw fit as long as everything was going well.

Quote: Wizard

How good is the AARP discount? It's pretty cheap to join, but I am not aware of any reason to do so, yet.

Depends. Some hotels do 10% and some treat it as a senior discount, which is sometimes more than that. It would be taken off of the, "Rack rate," but once again, people booking directly through me would get an even lower price.

I never really got very many people who spouted off about having AARP, not like the AAA people where it was always the first thing out of their mouths. I couldn't stand the AAA guests most of the time. They act like they're part of some exclusive club, despite the fact that I could pick up the phone and be a AAA member in five minutes.

Can someone help me? I just want to post my own form questions but I don't know how.

Anyone remember the Player's Club International? Was anyone here a member?



Direct: https://www.youtube.com/watch?v=RPuOWZgOj2I