Priceline Reverse pricing maximizes hotel room profitability

Absrtact: The reverse pricing of Priceline is equal to the hotel operators open to attract the purchase of the end of the single guest room, the hotel room rate of return to maximize. Mention Priceline, perhaps many Chinese consumers are not familiar with, but the frequent travel of Chinese tourists are aware of online booking site

The reverse pricing of Priceline is tantamount to opening up a source for the hotel industry to attract the purchase of "tail-single" rooms, maximizing the rate of hotel room profitability.

Mention Priceline, perhaps many Chinese consumers are not familiar with, but the frequent travel of Chinese tourists are aware of online booking sites booking, Agoda, and these sites are in fact subordinate to Priceline, as the international OTA (online travel agents) Giants, The largest U.S. tourism service based on C2B business model, Priceline's business covers air tickets, hotels, car rental, travel insurance and many other tourist services.

2013, Priceline annual net profit amounted to 1.8928 billion U.S. dollars, the first in the enterprise. Priceline's core growth comes from its online hotel reservation service provider Booking.com. Priceline has acquired the tourism search engine Company Kayak Software, online restaurant reservation service provider OpenTable, the company's business layout further expansion, competitive advantage has been promoted.

Reverse pricing, unique

In 1998, Jay Walker founded Priceline, and perhaps at the beginning of his creation, he did not expect Priceline to have a reputation in the industry thereafter. Information shows that after the dotcom bubble and the financial crisis, in the 2010 "Wealth creators" rankings, Priceline CEO Jeffrey Boyd even before Apple CEO Steve Jobs, the site is very high public acceptance.

As one of the world's leading online travel companies, Priceline operates through its six major brands, Booking.com, Priceline.com, Agoda.com, KAYAK, rentalcars.com and OpenTable.

And let Priceline really unique, when it is the creation of the C2B reverse pricing model.

Data show that the principle of the Priceline mode is that the closer the product is to the shelf-life value, the smaller the actual value of the ticket or hotel industry, the closer to boarding or occupancy, once the plane takes off or the room is vacant more than 24 o'clock the night value will be zero. The Priceline Web site allows consumers to report the required hotel stars, the city's approximate area, date and price, Priceline from their own database or supplier network to find the right price of the room and sell, return a page to tell whether the price is accepted, then the transaction. At present, "Car rental", "travel Insurance" is also included in the business.

This unique consumer pricing model works when some business guests need to control the budget and have high cost-performance accommodation requirements. The specific operation of reverse pricing is to be reported by the guest to the city, time, stay in the hotel standard and willing to pay the price, such as a business traveler needs a five-star hotel, so willing to pay 100 dollars a night, this product also needs to include breakfast, when the merchant passengers will send this signal, waiting for the business to receive orders , once the receipt of a single customer online payment, then for customers, got a high cost-performance hotel products.

In the meantime, the hotel industry also gets the commercial value while making the merchants get the benefits. Tourism is a light season is very distinct industry, when the off-season or weekday rooms are not full, the value of idle rooms can not be reflected in their leisure, but also to the low prices of these rooms for sale, so as to upgrade the hotel occupancy rate, can also increase the room income. Therefore, the reverse pricing of Priceline is equal to the hotel operators open to attract the purchase of "tail single" guest rooms, the hotel room to maximize the rate of return. At the same time, business travelers to submit credit card information can be submitted to purchase conditions, this transaction is irrevocable, can not be canceled, so for the hotel is a direct transaction, even if the end of the guests did not stay, the hotel has received money and no return.

In addition, there is no quote information on the Priceline, business guests only know the final price and star, geographical location, this way to protect the role of the hotel, after all, too low price will pull down the hotel's brand positioning, for some high star or value brand positioning of the hotel, can not open to low price sales, But in fact this kind of hotel also needs to sell the spare room, Priceline this kind of not public hotel quotation information reverse pricing mode also protects the hotel brand, be regarded as "the lining and face" all take into account.

Of course, there is also a point to mention, Priceline this model does not require call center, the revenue of its website mainly from the buyer to collect fees. Information shows that if the actual price from the supplier is lower than the consumer quotes, the difference will be Priceline earned.