Speaker 1: The three little words that can save you a lot
Speaker 1: on your next hotel booking. What's going on, amrich Demiro.
Speaker 1: This is Rich on Tech, and there's something called the
Speaker 1: rate parody clause. These are three little words that might
Speaker 1: save you big the next time you book your hotel room.
Speaker 1: Here to talk about that and other travel topics is
Speaker 1: Sharik Minhas. He is Chief Technology Officer with Silicon Valley
Speaker 1: Software Group. Sureike, thanks so much for joining me.
Speaker 2: Thanks for having me.
Speaker 1: You're saying that these words might make a difference. Why
Speaker 1: is that?
Speaker 2: Sure? I'll start off with a little history of how
Speaker 2: this came about. So you know, right after nine eleven,
Speaker 2: hotels were hurting big time and online travel agencies so
Speaker 2: by that, I mean companies like Expedia and price Line
Speaker 2: we're growing in popularity. And so what they were what
Speaker 2: they started doing was they started undercutting hotels rates. By
Speaker 2: they used to get a hotels would pay Expedia and
Speaker 2: Priceline commission for sending traffic that way bookings, and that
Speaker 2: commission was anywhere between fifteen and twenty percent. So expedient
Speaker 2: pricelines started, you know, cutting into their own commission to
Speaker 2: offer travelers cheaper rates on their own websites. So you know,
Speaker 2: if the hotel had one hundred dollars rate on their
Speaker 2: own website, Expedia would offer it for ninety bucks by
Speaker 2: cutting into their own commission. So hotels actually initially pushed
Speaker 2: for this rate parity clause, and what it said was,
Speaker 2: you can offer a different price on different websites. It's
Speaker 2: got to be the same no matter where you go.
Speaker 2: So the hotel's website has to have the same price,
Speaker 2: Expedia has to have the same price. Price line has
Speaker 2: to have the same price.
Speaker 1: So this is the reason why by basically, when you
Speaker 1: go shopping for a hotel room now online, it's pretty
Speaker 1: much the same price everywhere exactly.
Speaker 2: That's right. Unfortunately, it ended up backfiring for hotels, especially
Speaker 2: like the boutique and independent hotels, because time Expedient Priceline
Speaker 2: became these marketing machines and they became really efficient at
Speaker 2: getting people to land on their homepage instead of the
Speaker 2: hotel's own website. And so all of a sudden, you know,
Speaker 2: they had this, they had this power, and you know
Speaker 2: they were they were taking fifteen to twenty percent commission.
Speaker 2: So for a hotel, you know, if you as a
Speaker 2: consumer book on the hotel's own website say one hundred
Speaker 2: dollars room. That one hundred dollars goes completely to the hotel.
Speaker 2: If you book it on Expedia a price line, the
Speaker 2: hotel only gets eighty dollars. Right, So they hotels want
Speaker 2: you to book direct, But they're not marketing machines, especially
Speaker 2: the independents and boutiques. They don't have you know, the
Speaker 2: scale and the expertise to compete with expedient Priceline when
Speaker 2: it comes to marketing, right.
Speaker 1: Because they've got the SEO, they've got the awareness, they've
Speaker 1: got the you know, people just know, okay, book here,
Speaker 1: it's a legitimate site. And also they have a log in,
Speaker 1: they've got their credit card information stored with that site.
Speaker 1: This is probably why we see all of these companies
Speaker 1: like Hilton and others saying, hey, book direct with us
Speaker 1: and we'll give you some sort of perk. Right. Is
Speaker 1: that why there's is that how they fight back at
Speaker 1: these sites.
Speaker 2: That's how they fight back at these sites. And for
Speaker 2: the Hiltons and the Marriotts and those companies, it's easier
Speaker 2: because they're recognized brands. Where this really gets, you know,
Speaker 2: interesting for consumers is independent and boutique hotels. So you
Speaker 2: know those are generally like smaller, smaller chains less than
Speaker 2: twenty hotels, or people who own say one or two hotels.
Speaker 2: They tend to be kind of designer art type of hotels.
Speaker 1: And.
Speaker 2: You know they can't fight. They don't have the scale
Speaker 2: that a Hilton does to fight back. So you know
Speaker 2: that's why you could as a consumer really get the
Speaker 2: bigger discounts if you approach them directly.
Speaker 1: So you're saying to do something sort of old school.
Speaker 1: So find the rate online, but then literally what call
Speaker 1: all the hotel and say what.
Speaker 2: Yeah, find a rate online, call or email the hotel
Speaker 2: and ask them and offer them a price. So if
Speaker 2: you see one hundred dollar rate, say I'm coming into
Speaker 2: town two nights from now, and I noticed you had
Speaker 2: thise hundred dollars rate online, you know, would you accept ninety?
Speaker 2: And if you do the math, you know, if they're
Speaker 2: being expedia fifteen percent commission on that room, they're going
Speaker 2: to get eighty five dollars in revenue. And Expedia won't
Speaker 2: even give them your email address if you if they
Speaker 2: give you ten bucks off, they still end up making
Speaker 2: five bucks more and they get your email address, and
Speaker 2: you're and you know you're on their mailing list, and
Speaker 2: so you're you're dead customer instead of being Expedia's customer.
Speaker 1: So it sounds great. I have not personally tried this.
Speaker 1: Does it actually work? Is it more time and effort
Speaker 1: for them to have someone? I mean barely half the time?
Speaker 1: And I know you're talking about some of these boutique
Speaker 1: hotels where you can actually get someone on the phone,
Speaker 1: but the main hotels you can't even get someone on
Speaker 1: the phone anymore. I couldn't even find a email address
Speaker 1: for a hotel I was staying at the other day
Speaker 1: in New York City. I finally got a phone number.
Speaker 1: But you know, does this actually work.
Speaker 2: It's not likely to work for chains, so like the Hiltons,
Speaker 2: but it'll work for the boutiques and Independence, and there's
Speaker 2: a lot of them in the United States and even
Speaker 2: more in Europe. So like, just in terms of the US,
Speaker 2: I think there's about fifty three thousand hotels in the
Speaker 2: US total, and twenty two thousand of them are Independence
Speaker 2: and chains, so that's like forty two percent. I personally
Speaker 2: find that I have a much better experience staying at
Speaker 2: these hotels than the large chains because they go that
Speaker 2: extra mile to make it a personalized experience. So it
Speaker 2: worked for the independence and boutiques, not necessarily for the chance.
Speaker 1: Some of the other tips you have is use these
Speaker 1: flash sale sites to score great deals. So you mentioned
Speaker 1: one called secret escapes dot com. What's the deal on
Speaker 1: that site?
Speaker 2: Yeah, So they're staying as in they try not to
Speaker 2: advertise on Google, and they do advertising on TV and radio,
Speaker 2: which is kind of interesting because so and they figured
Speaker 2: out a way to do that profitably, so they will.
Speaker 2: They have luxury hotels all across you know the world
Speaker 2: and up to seventy percent off. And the way they
Speaker 2: do that is they don't reveal the hotel, you know,
Speaker 2: until after you've purchased it, but you know kind of
Speaker 2: the class of the hotel that you're getting, and they're
Speaker 2: generally very high end hotels. So you'll get, you know,
Speaker 2: something that you couldn't have stayed with, you know, at
Speaker 2: a normal price, much much cheaper through using a site
Speaker 2: like secret Escapes. And they don't they don't fall into
Speaker 2: this great parody clause because they're not the hotels are
Speaker 2: not publicly available, the rates are not publicly searchable, So
Speaker 2: that's the little loophole that they exploit.
Speaker 1: The Sunday night stay. So this is another tip. You
Speaker 1: have stay on a Sunday night so you have the
Speaker 1: best chance of an upgrade on a Sunday night.
Speaker 2: Yeah, that's generally the lowest occupancy night and so rate's
Speaker 2: the lowest and you have availability. Therefore, that's you know,
Speaker 2: in addition to getting a lower price, you're also going
Speaker 2: to get a better chance of having an upgrade because
Speaker 2: there'll be more rooms available.
Speaker 1: And something that I normally don't do, you recommend to say,
Speaker 1: you say, book packages instead of your flights and hotels separately.
Speaker 1: So what's the deal with the package? Because I always
Speaker 1: stay away from these because I feel like if I'm
Speaker 1: booking them as a package, I have less flexibility. So
Speaker 1: am I losing out on a lot of cash here?
Speaker 2: Yeah? So packages are like a loophole around rate parity
Speaker 2: because they bundle booth, the hotel and the flight together.
Speaker 2: You know, technically the hotel's price isn't revealed standalone. Therefore, yeah,
Speaker 2: they can offer a lower rate than they will be
Speaker 2: able to offer if you book a hotel separately.
Speaker 1: So even if they have a deal to let's say,
Speaker 1: you know, get that room for one hundred dollars from
Speaker 1: the hotel. They can offer it at sixty knowing they're
Speaker 1: going to just lose out a little bit, but make
Speaker 1: it up in other areas, maybe by selling you some extras.
Speaker 2: That's right.
Speaker 1: What are the two main brands?
Speaker 2: So it's a duopoly. Price Line is one brand, Expedia
Speaker 2: is the other brand.
Speaker 1: Okay, so what is price Line own?
Speaker 2: Price Line owns booking dot com, it's the big hotel site.
Speaker 2: It owns a Gooda as well, which is huge in Asia.
Speaker 2: And then Expedia owns hotels dot com, hot Wire, Travelocity
Speaker 2: and orbits wow.
Speaker 1: So no matter what, you're pretty much booking with one
Speaker 1: of those two if you don't go direct to the
Speaker 1: websites or use Google or use a smaller hotel. So
Speaker 1: basically you're booking with one of those two no matter what.
Speaker 2: That's right, And even the metasearch engines. So price Line
Speaker 2: owns Kayak and Expedia owns Trebago.
Speaker 1: And so sherik. Where do you book? Where do where
Speaker 1: should we book? Where's our best? I mean you like
Speaker 1: to do the boutique hotels? I mean where do you
Speaker 1: like to search? Start your search? Is it the Google?
Speaker 1: Or I mean pick one.
Speaker 2: I like to start my search and trip Advisor because
Speaker 2: I go look for the hotel that I want to
Speaker 2: stay at and then I contact them directly.
Speaker 1: And is trip Advisor owned by one of these conglomerates.
Speaker 2: Sip Advisor used to be owned by Expedia and then
Speaker 2: they spun them off because it was such a you know,
Speaker 2: great business in it's on its own all right.
Speaker 1: Lots of good good information, uh Sherik minhas from Silicon
Speaker 1: Valley Software Group again some great tips on how to
Speaker 1: get the best deal for your hotel room and just
Speaker 1: some insight into that industry in general. Serik, thanks so
Speaker 1: much for joining me on the show today.
Speaker 2: Thanks for having me.
Speaker 1: If you want more information, you can go to my website.
Speaker 1: It's rich on tech dot tv. I'm Richie Demurro. Thanks
Speaker 1: so much for listening. Happy booking. I'll talk to you
Speaker 1: real soon, but bye,