E-business: reverse auction in hospitality
Definition of reverse auction : same rules as a regular auction except that sellers compete to obtain a buyer’s offer and prices usually decrease over time. Reverse auctions became popular in the late 1990s due to internet evolution
Boom these past few years : first with online auctions then reverse auctions, especially in the travel industry. Very popular in the travel industry because it is a way of selling perishable excess inventory.
In most of reverse auctions, customers don’t know – until the offer has been accepted – which hotel they will be staying in. However, according to the customers’ preferences, it will show them example of hotels that might accept their offer so customers can still have an idea. Customers need to set up their preferences and wait if their offer is accepted.
Customers need to create an account to make their offer (emails are being sent) Types of hotels you will find on this website :
◦ Hotel resort (as the name indicated) ◦ All-inclusive resort ◦ Mainly located in islands or beautiful places (with swimming pool or near beaches)
◦ priceline.com ◦ oltiby.com ◦ resortcompete.com ◦ cruisecompete.com ◦ zujireverseauction.com ◦ ehow.com
Different steps to follow to make the offer : ◦ Choose the location and dates ◦ Choose the hotel star level ◦ Set up the preferences (wifi, spa, roomservice…) ◦ Name the price we are willing to pay ◦ Wait for an answer
As we saw before, reverse auction can be used as very good tool to sell excess inventory. Thus, hotels can participate in order to fill their free accommodations, especially during low frequency periods. They can follow as well their competitors prices. Besides, if they are not interested in an offer, they don’t have to participate to the auction.