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Sunday, April 1, 2012

Hotels bid for travelers through new website

A few days before Eric Kimmel flew from Montreal to San Francisco for a conference recently, he checked to see if he could find a better deal on a hotel.

There’s a new site for that called BackBid (www.backbid.com). Within hours of his telling it about his confirmed reservation at the St. Regis, where a standard room starts at $579 a night, seven competing hotels had contacted him with lower prices.

One of them, the Omni San Francisco, offered a $120 savings and was closer to his meeting.

“It was right where I needed to be,” said Kimmel, who owns a health food company in Montreal and had heard about BackBid from a friend. “I called the St. Regis to cancel my original reservation, which was refundable.”

Almost since the beginning of the commercial Internet – at least as far back as 1998, when Priceline.com launched – consumers have been bidding on travel. That model frequently benefited the travel industry, because customers didn’t know how much to pay and often overbid for their rooms, rental cars and tickets. But now, BackBid, a Canadian startup, is flipping that idea on its head by asking hotels to bid for your business.

The implications could be significant for travelers – perhaps even revolutionary.

“It’s empowering the consumer to say, ‘This is what I’m looking for,’ and the hotel to say, ‘This is what we can offer,’ ” said Chris Patridge, BackBid’s executive vice president of marketing and the company’s co-founder. “It turns the tables on the traditional way of booking a hotel room.”

BackBid takes advantage of the hotel industry’s generous refund policies, which often allow travelers to cancel rooms without a penalty as long as they give enough advance notice. Guests register with BackBid, adding their reservation and lodging preferences. That information is sent to BackBid’s hotel network.

Hotels may then submit bids to encourage travelers to “abandon” their current reservation – that’s the company’s word – and book with their property instead. The new reservation is nonrefundable and can’t be changed, and your card is charged immediately.

As you might expect, the BackBid concept has its share of cheerleaders and critics.

Arthur Frommer called it “a remarkable new website” on his blog, praising it as a “nothing-to-lose proposition.”

But the lodging industry isn’t so sure. Starwood Hotels and Resorts Worldwide, which owns the St. Regis, wouldn’t comment about losing a customer, despite repeated requests. Jason Freed, the news editor for the industry website HotelNewsNow.com, called BackBid’s strategy “a bit scandalous.”

“What if every time you bought an item from the grocery store, an article of clothing or a piece of furniture, once you got home you had competing stores offering to sell you the same item for a cheaper price?” he asked.

Hotels are concerned that BackBid will ratchet up competition to an unsustainable level.

“If Backbid succeeds, this sense of competition will only heighten and hotels will be undercutting each other left and right,” Freed said. “It’s not good for the hotel industry because everyone involved – owners, managers, brands – loses revenue.

“And while on the surface, cheaper prices may sound good to the consumer, it really means that hoteliers have fewer resources to put toward making your stay better.”

Patridge believes those worries are unfounded. As a former hotel manager responsible for revenue management – the folks who make sure that all the rooms are full and that the hotel is getting top dollar for them – he says BackBid is just another way of selling rooms.

“The name of the game is heads in beds,” he said.

And far from harming consumers, he says, hotels often bid on business by offering more amenities, such as free wireless Internet, a higher star rating than the original property and better prices – often $20 a night lower, or more.

A site such as BackBid could also have a cleansing effect on the hotel industry from a customer-service point of view.

I receive regular complaints from readers about mandatory “resort fees” and other nuisance surcharges arbitrarily added to the bill. But if you’re paying for the room up front and in full, then a resort can no longer surprise you with a mandatory fee for using its gym or for an in-room safe or concierge service. The hotel has to roll it into the BackBid rate.

As for the suggestion that BackBid could turn the hotel industry hyper-competitive, I have only one thing to say: Now hotels know how it must have felt when Priceline burst onto the scene and consumers had to guess the winning rate when they made a “name your own price” bid.

Many guests complained to me afterward, believing they had overpaid. Hotels didn’t care. Now they’re getting their comeuppance, some might argue.

Although Patridge won’t reveal any booking numbers, he claims the site is growing “exponentially” and adding new cities and hotel partners, although he declined to name any of the participating hotels.

But they’re out there. Dennis Schaal, who writes for the travel industry website Tnooz.com, recently used BackBid on a hotel stay in Chicago. He was surprised to discover that one of the hotels bidding on his business was the one at which he already had a reservation. It offered him a $39 per night discount on his room.

Schaal, a longtime observer of online travel startups, likes what BackBid does and believes it will benefit travelers.

“Can they make a business out of it?” he asked. “I hope so.”