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