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Thread: Hotwire profit margain

  1. #1
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    Hotwire profit margain

    I have been curious as to what kind of profit Hotwire is making on their bookings. Hotwire would not disclose the breakdown of the "Taxes, Recovery Charges and Fees" portion of what they charge. This additional charge on top of the "price" you pay for the hotel room is not a fixed percentage, and I have seen it vary from like a bit over 20% to a bit over 30%.

    On a recent stay, I got a downtown Montreal hotel room for $67, with the additional charge of $16.77, for a total of US$83.77. The hotel gave me a copy of the room bill (intended for Hotwire) by mistake. It showed a room charge of $58CAN, together with all the regular taxes the total came out to be $68.07CAN, which is $59.19US assuming a 15% conversion rate.

    So Hotwire is making a nice profit of $$24.58US (about 30% profit margain!!!) on this one booking. This is assuming that Hotwire does not recover the GST portion of the bill ($3.58 CAN) and that there are no additional kickback/commission to Hotwire, which would make their profit margain even higher.

    Hotwire seems to be making a very decent profit running their business!
    Last edited by Rex Kramer; 02-09-2007 at 08:41 PM. Reason: Correct Math

  2. #2
    Almost A GOOD BOY
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    similar to me....

    Recently spent a night (read an evening !!! ) to Hotel Du Fort
    My price for the night was $120C and the girl at the front desk gave me by mistake the Expedia bill that was 87 $ can ( excluding taxes)

    So that makes approx 30 % profit...

    I would like to do sales at 30 % profit .... That would be a piece of paradise to me !!!!

    Spiky

  3. #3
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    It's no big secret that Hotwire has always been priced higher than Priceline. For example, a hotel that you can get for $80 on HW like the Hyatt Regency can easily be had for $60 or less on PL. This is one of my bidding strategies whenever i want to get the Hyatt on PL. I see if it's available on HW...and when i see that it is, i bid at least $20 less than what's it's listed at on HW. Last time i was in town, i got it for $60. I buddy of mine who wasn't as chicken as i was bid $55 and also got it.

    The advantage with going with HW is that it's a safer bet that you're getting the hotel you want. What i do is first look at the packages....it not only gives you what's available in terms of star rating & amenities, but it also gives you the hotel's name! I then compare the amount of stars (rating) it has, the amenities and check the 'hotels' availalbe...this time, all it gives you are the star rating & the amenities...but you can figure out pretty much which hotel you'll be getting. If i'd be the type to rent a car, this would be perfect....i'd pick a room & car rental package and be able to decide which hotel i want to stay at. Or if i'd be flying in from the States, same thing. You have more control with Hotwire. You stay where you want to stay. With Priceline, it's more of a gamble and you risk staying at a place where you don't want to stay. But you do save a bit of money over HW, of course.

  4. #4
    Yes, HW, PL, and all the other 3rd party booking rates are making a profit, but I think about the hotels profit... if they can charge PL or HW these wonderfully low rates... they are making a killing off my back (um, lol) when I book through their direct websites, even off the reduced rates!

    xoxox
    Anik

  5. #5
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    Quote Originally Posted by Just-ass-weet
    HW, PL, and all the other 3rd party booking rates are making a profit, but I think about the hotels profit... if they can charge PL or HW these wonderfully low rates... they are making a killing off my back (um, lol) when I book through their direct websites, even off the reduced rates!
    Absolutely! Last year, i stayed at the Vogue during a few stays. I got it from both Hotwire and Priceline and paid approximatley $95 for it. I'd then check the Vogue's website and none of the rooms were under $200. Same thing with the Sheraton, a hotel i often stay at....i get it for $70 via HW and if i check the hotel's website, most of the rooms start in the $150 range. Same thing with other hotels i stay at such as the Hyatt Regency, Delta Mtl, etc. No wonder i always get the shitty corner rooms!

  6. #6
    Veteran of Misadventures
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    Rex,

    Very interesting thread and interesting observations. Of course, Hotwire is not a charitable organization and it should be expected that they are making money. However I also think Priceline is doing a good job keeping them honest. As Doc has observed some of the same hotels available on HW can be had much cheaper on PL. The only advantage to bidding on HW is that they gave you clues as to what you are bidding on, like Hyatt being listed as a "customer favorite", whereas with PL it is a pure roll of the dice as to whether you get the Hyatt or a less desirable hotel in that category.

    I personally use Priceline for the vast majority of my hotel bookings for this reason. I never use Hotwire on my American hotel bookings when I travel within the USA.

  7. #7
    Rex,

    I wish some Candaian Company can offer this service in Canada. I use Hotwire and Priceline for almost 100 nights a year and I really get pissed thinking that I am in Canada booking a hotel room in Canada and some US company is creaming all the profits. You also have to remember they make an additional 5% profit in Exchange rate.

  8. #8
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    Quote Originally Posted by spiky
    .... My price for the night was $120C and the girl at the front desk gave me by mistake the Expedia bill that was 87 $ can ( excluding taxes)

    So that makes approx 30 % profit...

    I would like to do sales at 30 % profit .... That would be a piece of paradise to me !!!!

    Spiky
    Spiky,

    30% profit margin is just way beyond what I was expecting Hotwire to make. I was thinking somewhere between 10% to 15%.

    In your case, seems like if you take the taxes into consideration, the profit margin is about 15%, which is on the high side but still seems reasonable.

  9. #9
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    Quote Originally Posted by poonyman
    Rex,

    I wish some Candaian Company can offer this service in Canada. I use Hotwire and Priceline for almost 100 nights a year and I really get pissed thinking that I am in Canada booking a hotel room in Canada and some US company is creaming all the profits. You also have to remember they make an additional 5% profit in Exchange rate.
    Pooyman, sounds like this is a great business opportunity to pursue!! 30% profit and you don't even need a store front or have any inventory cost!
    Last edited by Rex Kramer; 02-09-2007 at 09:06 PM.

  10. #10
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    Quote Originally Posted by Just-ass-weet
    Yes, HW, PL, and all the other 3rd party booking rates are making a profit, but I think about the hotels profit... if they can charge PL or HW these wonderfully low rates... they are making a killing off my back (um, lol) when I book through their direct websites, even off the reduced rates!

    xoxox
    Anik
    You should not be complaining, my dear... as an indy at least no one is making a commission on your fees. I am thinking e.g. at 160 with the 100 net the brokering fee is 37.5%!

    Rex
    Last edited by Rex Kramer; 02-09-2007 at 09:03 PM.

  11. #11
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    Doc, EB,

    I know what you mean about PL and HW, and the risk with using PL. Last time I used PL for a 3 star I ended up in Holiday Inn Select on Viger and I was hoping for Delta Montreal. HIS is ok but Delta Montreal and Hyatt are my favorites. I was never lucky enough to book into the Vogue from PL or HW.

    I was just very surprised that the profit margin is in the 30% range. There was a mistake in my original post on the profit margain (30% instead of 25%) which I have corrected.

  12. #12
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    Rex,

    I was lucky enough to get the Vogue a few times on Hotwire and it is an excellent hotel. I think I last got it on Hotwire for $105(USD) back in the summer of 2005, and it was a bargain at that price. It's the best hotel I have stayed at in Montreal. However, I believe the Hyatt is the best value of any Montreal hotel, when it can be had for $60 or less on Priceline.

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