Saving At Budget Motels In California

As I write this, I’m enjoying the spectacular weather in sunny southern California. Nothing beats 78 degrees and breezy at the end of October, but as you probably know, California isn’t a very budget-friendly destination. Even a campground will set you back as much as $35 per night! Most brand-name hotels in the downtown areas of cities start around $200 per night, which is strictly unaffordable for the average Seat 31B traveler.

Many travel blogs encourage you to play elaborate points games in order to stay in expensive hotels. Even if you do this, you’ll still end up spending as much as $100 per night. You have to consider the cost of credit card annual fees, the opportunity cost versus earning other types of points, and the taxes you have to pay (which are often billed based on the retail cost of the room). “Free” isn’t really free when it comes to this stuff.

Alternatively, you can look at lower cost options. California is the world’s seventh largest economy, and it’s well known for having unique local businesses. In addition to famous local fast food chains (such as In-N-Out Burger), there are three local motel chains offering clean, comfortable and decidedly budget-friendly rooms throughout California. I’d like to introduce you to Good Nite Inn, EZ-8 and Premier Inns.

Good Nite Inn has locations throughout California, and often advertises in coupon books that you can pick up at rest areas and Denny’s restaurant locations throughout the state. These coupons will almost always save you money. It’s worth picking up the book. They also occasionally have deals on their Web site. You’ll usually pay about the same price for two people as you would for a single room at Motel 6, and you’ll usually find a Good Nite Inn near a Motel 6 location (in Sylmar, there is a Motel 6 next door). Rooms typically look like they are from the mid-1990s, with a tube television and funky carpet. However, the beds tend to be comfortable, everything works, rooms are somewhat clean and there is air conditioning. Like Motel 6, Internet service isn’t available at all locations and it’s not free if it is available. Coin laundry facilities are typically available on site and there is an ice machine available as well. Motel 6 locations fill up fast (being some of the only reasonably priced accommodations in many parts of California), so Good Nite Inn is a good alternative.

Good Nite Inn room

A typical 1990s-inspired room at Good Nite Inn

EZ-8 Motels and Premier Inns are another good alternative. They don’t advertise at all, have no coupon specials, and they only offer a small AAA discount. Their Web page pretty much says as much. As well, these motels are typically located a little off the beaten path. In the Bay Area, you won’t be staying in the center of San Francisco. Instead, you’ll be staying in a bedroom community like Concord or Newark, but you can quickly and easily take the BART from there to San Francisco. When a room in San Francisco will easily cost you $200 or more per night, it’s worth staying a little out of town.

Image of E-Z-8 motel room

E-Z-8 Motel room – basic but comfortable

How much could you save? A lot! A room for a single person this weekend will cost you just $35 per night in San Diego. The W, not far away, has rooms starting at $170 per night (for the most heavily restricted, prepaid, non-refundable rate) and doesn’t even include parking! If you cashed in points for your stay at the W, you’d pay nearly as much just for parking and taxes as you would for an entire room at the E-Z-8.

Budget motels don’t offer frequent guest programs, concierge service or fancy amenities. Some offer watery coffee in the lobby, served in a Styrofoam cup. However, how much of your California vacation do you really want to spend in your room? Get out and enjoy the sun! That’s why you came, isn’t it?

How Much Did Priceline Pay For That Room You Bid?

Last week, I was in the Bay Area on some business travel. In my real life, I’m the founder of a tech startup. We’re not yet funded, so my travel budget is usually somewhere in between sleeping in my car and tent camping. I figured I could probably couch surf on my last trip, but that didn’t end up working out for most of the nights. I did manage to couch surf for two nights, but I also tent camped for a night and ended up in hotels, booked through Priceline, for two nights. For my Priceline room nights, the actual amount that Priceline paid was unintentionally leaked to me. This is normally very closely held information so it’s nice to get a rare inside look at the data.

picture of tent camping

Why not camp out to save money? China Camp State Park, California

So, a few words about Priceline, just so you know what I’m talking about and why this is special. Priceline sells hotel rooms through a number of channels. You can make a traditional reservation at the normal, published rate. Priceline receives a commission for handling the reservation just like any other travel agency. They also offer “express deals,” which allow you to choose a hotel by price, date, zone, and star level, with the name of the hotel revealed after you select a specific one. This works pretty much the same way as Hotwire, another popular “opaque travel” site. The best deals in the hotel business, however, are through Priceline’s “name your own price” offers. These work pretty much the same way as “express deals,” but you bid for a room and hotels within the zone can choose to accept your offer or not. In all cases, the amount that you actually pay bears little resemblance to what was either bid or advertised. Taxes and fees are lumped together and added on at the very end (just before you pay), which can inflate your bill by 20% or more. It’s a shady tactic, but just about everyone does this for hotel rooms.

When you use the “name your own price” method, I found out that the actual amount being “bid” to the hotel isn’t the same as you bid on Priceline. It’s actually a lower price. I was able to obtain data proving this in two cases (although it was provided to me inadvertently). For two different Bay Area rooms in separate properties on separate dates, Priceline pocketed about $10 per room night and refused bids that would have resulted in  a lower profit. I still saved a lot, but less than I expected.

For the first Priceline room night I booked, my winning bid was $60. The actual price I was charged, after my bill was larded up with taxes and fees, was $76.21. However, the hotel made an error and revealed the price that they billed Priceline. So, I was able to see that Priceline actually paid $65.88 for the room. Their profit on this room was $10.33. It’s worth pointing out that this particular hotel was selling its cheapest rooms for $129 per night plus tax, so the savings were still substantial. However, the hotel was nearly empty and really needed to sell the room. Given how my bidding was structured, Priceline could have sold me the room at a $50 and $55 bid. They held out until my bid was $60, guaranteeing themselves a minimum profit. Priceline thus demonstrated that it would have been willing to let last-minute room inventory spoil rather than selling it at a reduced profit.

For the second Priceline room night I booked, the results were nearly identical. I ended up with a $55 winning bid, which was unscrupulously inflated to a total of $69.64. The amount that Priceline was actually billed by the hotel, in data inadvertently leaked to me, was $61.56. So, in this case, Priceline’s profit was $8.08, and I bid for the same room–in the same zone–at $50 which would have turned a $3.08 gross profit.

So, how much is the minimum gross profit Priceline will accept for a name-your-own-price room night? At least based on my experience, it’s more than $5.33 and probably a little less than $8.08. For a single-night booking, this is actually a pretty slim margin. Priceline, after all, has to pay all of the costs of booking the room and processing your credit card. Still, it’s a little higher than I expected, and finding this data has encouraged me not to bid in even $5 increments. If I think I’m close to a winning bid, I’ll more likely increment my bids by $2 or $3 rather than $5.

Part of the value proposition to hoteliers in listing with Priceline is that it’s a good way to liquidate last-minute unsold inventory, albeit at a steep discount. Priceline, however, has demonstrated a willingness to allow inventory to spoil rather than to sell it at an (in its view) unacceptably low margin. It’d be interesting to know whether Priceline’s contracts obligate it to accept break-even bids in order to help its partners unload stale room inventory, and how much this actually is (bearing in mind Priceline’s operating costs). If not, hoteliers would be wise to insist upon break-even or better sales when it comes to any “name-your-own-price” sites.

You might be asking at this point “How was this data leaked?” I’m not going to go into details, because this would probably get the hotels involved in trouble. I’m also hoping that more data will continue to leak so I will have more points of reference in order to formulate better bids. I will say that there were no hacks or shenanigans involved. The information was accidentally leaked to me in both cases, and this probably happens fairly often; the difference with me is that I actually knew what it meant.