A 3rd party vendor used shared information and created a fake hotel supply crunch to keep rates at all time high.
https://www.siouxlandproud.com/news/...tel-rates/amp/
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A 3rd party vendor used shared information and created a fake hotel supply crunch to keep rates at all time high.
https://www.siouxlandproud.com/news/...tel-rates/amp/
Not sure if this lawsuit will be successful.
Pricing data is public and each hotel can scrape that data itself, and then adjust prices accordingly. There is no law against raising or lowering your price based upon what the competition has.
This third-party tool they were using would monitor demand at all properties on the strip, as well as prices, and then come up with suggested prices for each hotel to have. It was not playing games with fake demand, but rather just making suggestions to all hotels to keep their prices in line with one another. This essentially prevents a situation where one hotel panics and lowers prices, thus forcing the others to have to follow suit in order to be competitive.
Is this price fixing? Maybe. But there's a fine line between price fixing and pricing based upon competitors. Price fixing is a direct agreement with competitors to keep prices artificially high. It looks like there was no such agreement here, but rather a suggestion from a piece of software, which the hotels could either follow or not follow.
BTW, if you want to hear something dirty, Caesars does something called "dynamic pricing". If they notice you looking for a room, and then you come back an hour later, they will assume you are very interested, and sometimes artificially raise the price for you!
For this reason, it is better to login the second time with a different browser, or incognito mode, as this throws a wrench into their system and the dynamic pricing bullshit doesn't work. But if you see this happening, just wait a few hours and it should go back down.
Thanks for the dynamic pricing tips, I actually just booked a trip to horseshoe last night for feb 28 march 4th. In my regular browser they wanted 56$ a night. When I opened an incognito browser and logged in, 36$, plus resort fees of course. But I’ve heard your tips on the show before and you’ve saved me some money multiple times so thank you!
I read a lawyers review videos on the lawsuit and in his opinion it’s illegal to share pricing amongst competitors to keep prices high which is what’s happening. I wonder if Eric would have any input on the subject. I do believe they are limiting room supply through the 3rd party site to keep rates high but rooms seem to be 200$/300$ a night nationwide at the moment.
Dan said it.Quote:
Originally Posted by Dan Druff
I used to be a hotel manager and what I can say is that Dan is 100% correct on this matter.
Price fixing/Collusion is directly speaking to your supposed, "Competitors," and, not only agreeing to rates, but also agreeing to be honor-bound to not undercutting the other guy.
Looking at the competition's websites, or Hotels.com, is NOT collusion; it's supply and demand. You're using the same information that the public has; you're just using it for a different purpose.
We had a sort of saying, "If you're sold out before midnight, then your rates were too low." Ideally, you will rent your last room after midnight to a walk-in who you will charge an unconscionable amount of money that the quality of the facilities could never possibly justify because his choices are that or drive fifty more miles...just to pay maybe $10 less.
The biggest thing was the weekly rates for the out-of-town workers, which we were absolutely NOT (deliberately) sharing with one another under any conditions. You'd usually send in some employee they hadn't seen yet, or would call them from a number that wouldn't be known to them, to figure out what their weekly/monthly rates were. Obviously, that wouldn't be particularly relevant to LV. My nightly rates were basically proportionate to the quality of our hotel compared to others in town, but my weekly rates I tried to be roughly tied for second-cheapest...and our rooms were better for weeklies than the property we were tied with, the one cheaper than us and the next one more expensive than us. In some ways, we were the best hotel for weeklies, for awhile, depending on what you were looking for. We were the first to do full-sized refrigerators and flat screen LCD HDTV's in every room of the hotels in town; my idea.
Maybe we can have Eric on the next radio to talk about it.Quote:
Originally Posted by Drawingdead
The thing that lawyer you watched may not understand is that the prices are already shared! The entire list of prices are available on every hotel website. The software they're using is simply scraping that information and making suggestions as to what prices they should charge.
I have a feeling that this model specifically exists to dodge price fixing laws. As Mission146 mentioned, there's no agreement between properties to fix prices -- just "suggestions" what prices to charge, by a third party company which is used by almost all of them!
The only way this could be framed as illegal is if the tool can be said to be delegated to manage the prices of these properties, which could be likened to an official price fixing agreement. However, if the hotels can show that they deviate from this tool's advice fairly often, such a claim can't be made.
It will be interesting to watch how the lawsuit proceeds, but my prediction is that this will be a fail.
I think it's possible that the use of software kind of blurs the lines, but I'm not sure. If the software is such that one rate change automatically results in all of the other properties changing rates in whatever way corresponds to where they want their price point to be (relatively speaking), then I could see where that might be viewed as effective collusion.Quote:
Originally Posted by Dan DruffMaybe we can have Eric on the next radio to talk about it.Quote:
Originally Posted by Drawingdead
The thing that lawyer you watched may not understand is that the prices are already shared! The entire list of prices are available on every hotel website. The software they're using is simply scraping that information and making suggestions as to what prices they should charge.
I have a feeling that this model specifically exists to dodge price fixing laws. As Mission146 mentioned, there's no agreement between properties to fix prices -- just "suggestions" what prices to charge, by a third party company which is used by almost all of them!
The only way this could be framed as illegal is if the tool can be said to be delegated to manage the prices of these properties, which could be likened to an official price fixing agreement. However, if the hotels can show that they deviate from this tool's advice fairly often, such a claim can't be made.
It will be interesting to watch how the lawsuit proceeds, but my prediction is that this will be a fail.
Acknowledging that the dynamics of the two markets where I managed hotels are totally different to Las Vegas, I can say that my tactics were all manual. Here's how it basically goes:
1.) Know your, 'Special Event,' dates and react to new information.
A.) The first thing you have to know is what dates everyone is going to sell out, sooner or later. At that point, I wanted my prices to be higher than all other economy hotels (we were the Economy hotel in town with the best overall rooms and amenities, imo), but I wanted to be less than the lowest-priced limited service hotel. This was generally easy to accomplish and the only thing that would throw a wrench in it was a Limited Service pricing itself below me, but even then, I wouldn't adjust if I absolutely knew that we would end up sold out, sooner or later.
B.) The next step is to periodically check rates for those dates, every two weeks or so, then more often as it got closer to the date. There usually wouldn't be any dramatic price changes, but any unexpected rate decreases across the board would signal to me that the rest of the market had lost confidence that we were all going to sell out that weekend.
C.) Finally, you would want to call the other hotels from numbers not known to them pretending that you were wanting to book a group rate for one of these special events. The two pieces of information gathered from doing this was what they were doing with larger group rates (which can't be found online) and what sized groups they could handle. Even if they were showing online availability, if they couldn't handle booking a group of ten, then I know that they're nearly sold out for that special event and I can remain aggressive with my rates.
2.) For regular nights, you basically just want to check the rates competitors are charging for each night for the next week. Most hotels would do only that, but what they didn't notice is that I would significantly reduce online rates, for that night only, after 7:00p.m. to sometimes make myself the cheapest option. Anyone else with online rate control (i.e. management) had already gone home for the day and probably wouldn't have been inclined to go online and do work even if their staff told him what I was doing, "Ah, just let him have it," so I had carte blanche to basically dump rooms as long as it was going to be, at least, a little bit profitable.
In fact, the only thing that really stopped me (eventually) was the franchise putting a rule in place that, if a guest noticed a lower rate online (for the same room type) then I would have to reduce their rate to match, unless they had booked on a third-party website aside from the franchise's own. At that point, I had to put a little more thought into this tactic and pick my spots.
Another de facto restriction I had was that I obviously couldn't ever make a nightly rate (online) less than a weekly was paying on a nightly basis, especially if it was a company that had a block of rooms. The three most important rules that I laid down for staff were these:
1. Don't piss off our weeklies.
2. Don't piss off our weeklies.
3. DO NOT piss off our weeklies!!!
3.) Weeklies were of the utmost importance because, not only are they the least amount of hassle, but they also give you an occupancy base that enables you to be more aggressive in your pricing when it comes to travelers and special events. They were especially important during the slower season, which is basically anything that wasn't Summer or two specific weekends elsewhere on the calendar, because they were guaranteed money.
Sure, long-term guests made it so that you didn't have as many rooms to sell during super busy weekends, but the long-term trickle of positive revenues made it more than worth it.
In addition to the tactics I already mentioned, I'd also drive around to job sites and talk to supervisors. I leaned heavily on the fact that our hotel had a bar, so you never had to go out to drink. I also pimped the hell out of our awesome TV's (with built-in DVD players!) and the fact that we had full-sized refrigerator/freezers, so if you didn't feel like going out to eat (which they often didn't after 12+ hour shifts) you could just buy some frozen dinners and pop them in the microwave.
Another thing that I would do is get the company names from all of the trucks I'd see in the parking lots of other hotels, call those companies, explain what our hotel had to offer and offer to beat any rate. This was extremely effective if the company was directly paying for the rooms, and sometimes with the per diem guys (for food and accommodations) because they got to pocket what they didn't spend.
Of course, I was quite hated by several of the other hotel managers, though some respected the hustle. Their take was they just get whatever they get and it will all work out in the end; my take was it was my job to make the hotel as much money as possible, by any means necessary.
A lot of videos/news stories I watched believe this lawsuit won’t work since it’s public information but since 1 company controls all the data there could be a problem. I miss 20$ imperial palace rooms with no resort fees lol