All About Hotel Mistake Rates

If you are a member of one of the many frequent traveler social media groups, mailing lists, Slack channels or Discord servers, you might have occasionally seen someone post about a hotel that is available for an incredible rate—half off during peak periods, or even 90% off. These room rates have to be a mistake, right?

Often these “too good to be true” rates are mistakes, but sometimes they are discounts based on soft market demand. For the opportunistic traveler, unusually low hotel room rates can be an incredible value or an incredible hassle—often both.

Who Publishes Rates?

To understand mistake hotel rates, it helps to understand how hotels determine and publish their room rates.

Most hotels’ rates are set through a person called a revenue manager. The revenue manager is responsible for determining the base rate of a hotel, when to raise or lower the rates, and by how much. Generally, the revenue manager will manage rates and room inventory to try to maximize profit. Sometimes this means lowering prices in order to sell more rooms during an off-peak period. Sometimes this means raising prices to capture more profit from demand that spikes during an event.

At many hotels, the revenue manager sits at the hotel and reports directly to the general manager. However, some hotels associated with a global hotel brand, such as Marriott, Hilton, Accor or Hyatt, have fractional revenue managers who work for the brand, not the hotel.

Generally, a hotel will set a standard rate and a range in which the revenue manager can adjust prices without conferring with the hotel’s general manager. This arrangement gives the revenue manager some discretion and ability to respond quickly to peaks in demand or lagging bookings. It also allows revenue managers to use software that optimizes profits, given a pricing range and occupancy targets, but sometimes the revenue manager will use their judgment to publish hotel rates directly.

How Do Error Hotel Rates Happen?

According to the hotel general managers surveyed, mistakes in published rates usually happen because of one of three reasons.

A Hotel Allows Rates To Float More Than They Should

Determining how much to let hotel rates float is as much of an art as it is a science. It requires understanding the hotel’s market positioning and travel patterns, but it also requires making calls based on new information.

You might expect that hotels would only let their rates float within a limited range, such as +/- 10%, but it might be reasonable for a hotel with a standard rate of $100 per night to sell rooms for $50 per night during an off-peak season and to raise prices to $200 per night if a large sporting event or a BTS concert is in town.

Especially during times of unusual changes in demand, increasing the range that a revenue manager can price rooms is hugely advantageous to a hotel that wants to maximize its profits.

Incorrect Manually Published Rates

This is perhaps the way mistake rates happen that is easiest to understand: Somebody made a mistake when publishing a rate. There are hundreds of reasons manual mistakes could happen, but the most common is likely a digit got left off the price or an error was made when converting currencies. At the end of the day, people make mistakes and incorrectly keyed rates do happen.

Technology Glitch

For most hotels, you can book the same room through a large number of channels: The hotel’s branded website, the hotel’s reservations line, an online travel agency, an opaque booking portal, a travel consolidator or by simply walking up to the front desk of the hotel.

Publishing room rates through all of these different channels requires hotels to use automation and booking system integration. Making matters even more complicated, sometimes rates get republished.

For example, Expedia Group owns a number of popular booking portals and republishes rates to its various online properties. Given that a large hotel may be working with a dozen different systems, each with its own quirks and bugs, it’s unsurprising that occasionally errors happen among this web of integrations.

When Does a Hotel Become Aware of a Mistake Rate?

Because mistake rates are relatively common, hotels do not actively dedicate staff to seeking out and quashing them, yet they are almost always found by the hotel. How does this happen?

Most often, mistake rates are found by the hotels within a few days or weeks after being discovered by travel hackers. Because mistake rates usually entice a rush of opportunistic travelers to book a large number of rooms at a hotel, often within a specific date range, the pattern will usually attract the attention of a revenue manager.

If a hotel revenue manager notices that rooms are booking extremely quickly during a specific date range, they may start trying to identify an opportunity to make the hotel more money by increasing rates. Is there an event in town that they didn’t know about? Did another hotel go out of business and spike demand? Did their hotel brand run a promotion? In every case, the revenue manager will look at published rates when trying to answer these questions.

Another way that a revenue manager might identify a mistake rate is by seeing an increase in bookings without a correspondingly large increase in revenue. Many hotel revenue managers run weekly reports to get a high-level view of how they are tracking against profitability and occupancy targets. If something is amiss in one of these reports, and a mistake rate is the root cause, a thorough hotel revenue manager will find it.

Finally, mistake rates are discovered when hotel staff interact with your reservation. It depends on the system, but almost any time hotel staff interact with your reservation, they will see your rate. This could include responding to a special request that you made, requesting a change to the reservation or even blocking specific rooms prior to your arrival. Of course, calling a hotel to confirm your rate and reservation is also almost certain to get somebody’s eyes on your rate.

What Can a Hotel Do and What Should You Expect?

If a hotel discovers a mistake rate well in advance of your stay, you can expect your reservation to be canceled. What happens if a hotel discovers such a rate shortly before your stay or at check-in varies.

Even if a hotel cancels your booking, it still wants your business. Savvy hotels will reach out to customers whose mistake rates they cancel and offer a discount or perks for rebooking at market rates. These discounts can range from extremely generous to insulting.

How much of a discount could you expect? One general manager said that he could give a 5% to 10% discount beyond the best rate. Another mentioned that they are willing to discount the rate by the 15% commission they would otherwise pay to an online travel agency. Yet another suggested that they could provide rates just above the marginal cost of the room. Of course, it’s not a given that a discount offered by a hotel will be great or even market-competitive, so be sure to check any discount offer against published rates for comparable hotels.

However, if your reservation is not canceled and you show up to the hotel, you can generally expect that the hotel will honor your rate. Every hotel general manager surveyed said that if you have a confirmed reservation, their hotel would honor your rate, even if they were losing money by providing you a room. At the end of the day, for most general managers, losing a little bit of money on a mistake rate is so uncommon that they consider it a cost of doing business. No hotel manager wants the PR nightmare that can occur if a hotel turns away a guest with a confirmed reservation, especially in the age of social media.

What To Do If a Rate Is Not Honored

Ultimately, there are very limited consumer protections around hotel bookings, so you have little recourse if your reservation is canceled shortly before your arrival. What should you do if a hotel cancels your booking or worse, denies you check-in upon arrival?

If a hotel cancels your reservation shortly after booking but well in advance of your arrival, your best course of action is to simply find another hotel. The hotel is unlikely to reinstate your mistake rate and has probably taken action to pull the rate from online travel agencies. If the hotel does not offer a discount, you could call or email the hotel, explain the situation and ask for a discount. After all, the worst they can say is no.

It’s best to have a backup plan in case the hotel does not allow you to check in on a rate that it deems invalid. Like mentioned above, most hotels will let you check in if you show up with a confirmed reservation. The best course of action here is to be nice, but hold firm.

If you do end up finding yourself unable to check in to your hotel, consider using one of the last-minute booking sites or an opaque booking site like Hotwire.com or Priceline.com to find alternate accommodation. Alternatively, you could book a backup room for your stay in case your rate is not honored. Be aware that even cancelable hotel reservations usually require cancellation 24 hours to a few days before your stay to avoid being charged for the first night.

Bottom Line

If you find a hotel mistake rate that works with your travel plans, it can save you an incredible amount of money—if you’re willing to accept the risks. If you find an astounding rate for a hotel stay, wait a few weeks after booking before making nonrefundable travel plans. If you are lucky enough to have the reservation stick and a hotel honors the rate, enjoy your vacation on the cheap. But don’t rely on mistake rates for critical travel arrangements and always have a backup plan.