How do online travel agencies offer such low hotel prices?

They don't. We do. It comes out of our hide. Online travel agencies charge high commissions to the hotels.

Booking.com charges 20%. Hotels.com, Travelocity, Expedia, Priceline and others charge between 22 and 25%. And that's if you have a franchise affiliation and let your franchise organization negotiate it for you.

And those are the ones where you -- the consumer -- don't get that much of a bargain. A contract between a hotel and an online travel agency provides for 'rate parity': each OTA wants a promise from the hotel that the rate provided to it is the lowest publicly available rate, and provides stiff penalties to the hotel if a lower rate is found elsewhere. Likewise, every franchise organization offers some version of a 'Best Internet Rate Guarantee', and holds their franchisees to it. (I should have listened to my dad and made it my goal to go to Duke Law when I was a kid: I smell a lucrative opportunity here for a mass tort lawyer to file a class action suit on antitrust and price fixing claims . . .). Since the 'lowest publicly available rate'/'Best Internet Rate' can only be one number, and that number can't be any lower and still be either the 'lowest publicly available rate'/'Best Internet Rate' ; what you pay on any of those websites is going to be very close to the hotel's 'Best Available Rate', the rack rate (see Michael Forrest Jones' answer to What is and why do hotels have a rack rate? )

Do most hotels use a specific POS system at the front desk or a larger computer system?

Eighty to eighty-five percent of the hotel POS systems out there are either 

• so exorbitantly priced that the only reason anyone will buy it and put up with the astronomical monthly support costs is because it's a franchise organization's required purchase (Micros-Opera), or
• such an absolute piece of crap that the only reason anyone will put up with it, period, is because it's some franchise organization's required purchase (ChoiceAdvantage, HSS in its day)

The only reason the percentage isn't higher is because

• I have no experience with Marriott's FOSSE and don't expect to (Beechmont isn't a Marriott developer and does not aspire to become one, and FOSSE is Marriott's proprietary system: only Marriott-branded hotels have it.) For all I know, it may be a good system (Marriott owns, or at least itself manages, a lot of their hotels so, like me, they'd have limited patience with such a disease such as Choice Hotels' ChoiceAdvantage, and Marriott would have the size and the clout to insist on the best, and be sure they're getting it); and
• Most Best Western member hotels - whose owners actually have a choice as to which one to go with - use a good one (Visual Matrix) that I actually like.

Someone got me started on hotel property management systems a few months back (What are the best property management systems for small hotels? ), so I evaluated several systems and called out what I like to see in them.



Get the franchise organizations out of it, and hotel POS systems will get better overnight: the free market and competition would do its power and magic. (I'm going to repost this under 'law' and 'anti-trust law' categories, hoping some ambitious young lawyer who's into anti-trust and mass tort law will get ideas . . . :-) ) Until that day comes, however, hotel POS systems remain in the Ma Bell era.