By John Rodriguez, Steve Xu, Florian Lecarpentier, and Alex Wang
New smartphone apps have been developed to help hotels offer last minute, discounted hotel bookings. The company HotelTonight was the innovator of this business, which has now expanded into Europe and 10 countries around the world, offering a new set of deals daily. The vacant hotel rooms appear on the day, a day in advance, or up to a week before travel to the app. The user can then filter by cost, location, and rating for hotels they are looking for. Another new service is Hot Hotels, targeting young business professionals looking to go on a trip. With over 100,000 people downloading the app, the hotel booking apps are part of new trends in the market. More people are looking for the best possible deals due to the economy and experience “on demand consumption”, or the need to access everything immediately via smartphone.
Hoteliers are embracing the new apps as a way to reduce the loss from empty rooms. While hotel room occupancy rates have risen close to the levels before the recession, hotels are looking for those rates to continue to rise, as business traveling increases into the spring season. With more customers using the hotel booking apps, hotels could further increase those rates and associated revenues.
With these new apps, a majority of us have gotten used to checking online to find the best travel deals. However some of us are completely unaware that these so-called deals may be less of a bargain than we thought. What these new app users should know is that recently, big name online travel sites such as Expedia and Priceline colluded with the world’s largest hotel chains over the “best match guarantee.” This price matching guarantee actually boils down to price fixing, a standard minimum number set and agreed by both parties to benefit both players rather than consumers. In other words, online travel sites that market themselves as the best source for cheapest hotel rooms are creating the illusion that savvy consumers who research online find the best deals, when in fact the situation is completely false. Lawsuits have been filed for the illegal action of tacit collusion between hotels and sites such as Travelocity because their business strategy allowed price to be determined by the hotels, not by the market. At the end of the day, good business practices bring long term profit. Hotels like Hilton and Marriott face the consequences along with the same online travel sites that made those apps.