Cashing in on Pricing Errors

The Wall Street Journal (subscription required) carries a piece this morning offering a recent history of pricing errors, “Consumers Race to Cash In On Flurry of Pricing Errors That Some Are Honoring”

    In recent weeks, sharp-eyed consumers have spotted a number of travel pricing mistakes — including several $1.86 US Airways flights, and a $51 flight to Fiji on Travelocity — and have raced to cash in.

    Pricing mistakes are a growing headache for travel companies since consumers are increasingly able and willing use the Internet to quickly spot and snap up low prices. As a result, it is getting easier for them to take advantage of pricing slip-ups that happen often when prices are updated in real time before the company can correct the mistake. For instance, in less than a half-day, about 1,000 mispriced US Airways tickets were bought before the airline caught on.

    This month, for instance, London’s luxurious Lanesborough Hotel mistakenly sold rooms online for £35, or about $67, instead of £350. The Lanesborough, a Starwood Hotels & Resorts Worldwide Inc. property, gave people who had booked one reservation each at the low rate, up to a three-night maximum — but excluded perks like airport car transfers.

    The recent round of snafus started in early April, when Sabre Holdings Corp.’s Travelocity was selling an Air Pacific flight from the West Coast to Fiji at $51, including all taxes and fees. (It was supposed to be a companion fare.)

    In the case of the Lanesborough Hotel, within 10 hours of posting the price, 34 people made 86 reservations — in at least one case, for a block of 30 nights, the hotel says. At first, the hotel offered to rebook the customers at £350. About 24 hours later, Starwood backed down and offered the three-night compromise. (Customers who reserved through Cendant Corp.’s Orbitz got all the extras, including daily breakfast with champagne upon arrival.)

    A couple of days later, US Airways started selling a $1.86 (plus taxes) roundtrip fare originating or arriving in eight minor-market cities, including Lebanon, N.H. and Hilton Head, S.C. The company says about 1,000 tickets were sold and it has decided to honor them.

    In 2001 at the W Times Square hotel in New York, a Starwood property, a rate was listed as $25 instead of $250. The hotel honored it because only 250 rooms were booked. The following year, when Starwood’s Bora Bora Resort & Spa mispriced some luxury bungalows at about $85 rather than $850 and 136 people booked 2,631 rooms, the company struck a bargain: It told guests it could sell the rooms for $531.

As the piece observes,

    [I]n an era in which low airfares are proliferating, and rock-bottom promotional prices on travel are commonplace, sometimes it can be tough to tell what is real and what isn’t.

True enough. Yesterday’s AU$1 rate at a Melbourne, Australia hotel appeared on Priceline’s (non-bidding) hotel search site. William Shatner advertises phenomenal deals, and I’ve seen legitimate $5 rooms on Priceline (and even legitimate $13 rooms in Vegas booked directly with the hotel).

Ryanair in Europe has been known to sell flights for a $1 as well. So while we may ‘know it when we see it’ when an error rate pops up, it can’t really be incumbent upon the consumer to tell the difference between a promotion and a mistake.

Furthermore, consumer mistakes aren’t treated all that lightly by most travel providers. United aside — if you book directly with them you have 24 hours to cancel a nonrefundable reservation — if you buy a ticket for the wrong date or flight or city you’re generally on the hook for change fees in a best case scenario. Those are the rules that airlines and hotels offering pre-paid rooms often apply, and should stick to them as well.

As I mentioned recently, when money hasn’t yet changed hands there’s a good likelihood that a deal won’t be honored. The Bora Bora Nui rate is one example, along with the Thai Airways $0 first class fare from London to Bangkok (which required in-person ticketing), and it looks like the AU$1 Melbourne hotel will be another example.

Money changing hands, though, is not a guarantee that a deal will be honored — and as the W Times Square offer shows it isn’t always required in order for a deal to be accepted either. But in my experience it’s a good predicter.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. On the Today Alan Greensburg stated there were websites that post those mistakes online. Do you know them?


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