I'd love to have the need for something like that, but usually we have the opposite problem: empty rooms (meaning, for your system, no bidders at all; and the rooms we do rent go for fixed prices higher than a bidder might want to bid), and margins not all that good on the rooms we do rent, once all of our costs are taken into account.
Some hotels might want something like that for, perhaps, six days a year for special events, where the hotel will be fully booked weeks ahead of time. For example, on the local university's homecoming weekend, we know we're going to be full: the only question being, how much can, and should, we charge? (We want to be as profitable as possible, but if I can't get $220 for the $100 room on the big night, I'm willing to at least think about giving it to the guy willing to pay $190. On the other hand, if someone is willing to pay me $275 for it, that person will get it, no matter how many people are willing to pay $220. And there has to be a reserve of at least what we could get for the room at a fixed, what-we-guess-to-be-the-market-rate rate.) I myself have contemplated auctioning special event reservations on eBay to see how it would work out, but have yet to actually try it.
So -- with a little tweaking of what you apparently have in mind -- you might be on to something. Perhaps if you went about it that way . . .
Find the makers of a property management system with whom you can work out an alliance, and offer it as an add-on to their booking engine. There are a lot of them out there. Too many, in fact. Eventually, we're going to buy one, when their investors start getting disgusted with the performance of many of them and will start showing an openness to selling them off cheaply, so we'll have a proprietary system, and can tell the developers to add features that we want, without having them tell us "we don't", or "we're not planning to"; but it'll have to wait a few years. Meanwhile, many of the ones that are out there now could use a few more unique features.
Another possible opportunity for you - an online travel agency. Set up a website where people can bid rooms in any participating hotel in a given town (instead of in individual hotels within that town -- e.g., I'm planning a trip to Augusta on such-and-such dates in May, I'll log onto your site and click on Augusta, and see what I can get if I offer $65 per night); and hotels can log on, see the various bids posted, and if they see a bid high enough, take it, or make a counteroffer.
And if you make it membership based, or ask your would-be bidders to open an account where they provide some identity confirmation, a valid credit card number, and some information about themselves that's displayed to the hotel, you might even get good hotels to participate on slow nights. The customer data you'd be able to pass along to the hotels would make it a valuable marketing tool for them.
Instead of asking struggling hotels in the area to make rooms available at a deeply cut rate and let the cheapskate guests pick one, let desirable guests bid, and let the hotels pick the guest. Let the hotels decide on a night-by-night basis if they want to take your bidders' $50 per night bid for one or several nights. You can collect a travel agents' commission on the booking. (Keeping it at 15% or below, unlike most OTAs, will encourage hotels' participation. One thing all hotels hate about OTAs is their 20-25% commission rates.)
(If I'm slow that night, would I take a bid on such a site from just any old Joe Schmoe, and let the guy rent a room for fifty bucks? Probably not. But a lot of nearby hotels with a TripAdvisor bubble score of 3.5 or below and a lot of empty rooms probably would. Would I do it for some guy who's in senior management at a large company that has a large plant or backoffice location in my town, and whose identity and status as such is confirmed, who can possibly be a good regular customer at a rate I'm happy with on a more permanent basis, and who can perhaps refer -- or even better, direct -- co-workers or others to my hotel when they're in town? Maybe I just might . . . Would I do it for someone whose guest history, as shown in his account info on your website, to which I have access, shows that he or she travels a hundred nights a year, and makes a stop in my town a couple times a month for three or four nights? Quite likely, but only once, although we'll certainly negotiate a better rate for this person than he or she would be charged as a walk-in, if that'll make him or her a permanent customer . . . Does she coach a softball team at a small college in her hometown, that might travel to my city for away games? We can certainly talk . . . I might not see her during her stay at the 'just this once as a treat, don't get spoiled' fifty dollar rate, but my business development people will have all of her data and a salesperson will be in touch.)
You could even charge the hotels to participate. I'd let them have it for free for six months, just to get a taste of it, then make it a $60 for six months, or $100 per year, subscription. (And I'd give discounts for high TripAdvisor bubble scores, just to make sure I had some good hotels participating. For two or three good hotels in any given town, I'd allow them a free subscription in exchange for an agreement to take a minimum of fifteen room nights per month that are bid on that website. I'd also negotiate that travel agent commission rate. You'd need participation by the cheap, crappy hotels, because they'd be the only ones desperate enough to take any $50 per night guest they can get, and that's where you'd get most of your revenue. But unless you incentivize participation by good hotels, you'll have nothing but crappy hotels to offer, and you'll have no bidders.)
Originally, I hadn't planned to offer you a whole lot of encouragement: I generally dislike 'how do I sell something to hotels' A2A's. This is the 'hospitality industry': everyone has a way to make a million bucks, but it always seems to involve someone else's million bucks, and it gets tiresome, particularly with some of the more flaky products people come up with. But now that I think about it . . . if it works, I should get a few points in your startup. :-)
Originally appeared on Quora
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