You’re heading out to meet some friends for a weekend trip. The dates are set, and the flights are booked. You make the hotel reservations. The price seems a bit steep, but you worry the rates could rise if you delay the booking process. While the rates could rise, it’s also very possible that they could decrease as the trip approaches. It’s the question that stays on every budget-conscious traveler’s mind: when is the perfect time to book and save money on the trip?
A new startup called DreamCheaper aims to answer that question for hotel guests. Here’s how it works:
1) A guest makes an online reservation that can be cancelled without incurring any additional charges.
2) The guest forwards the confirmation to email@example.com.
3) The site’s system constantly scans hundreds of travel websites to compare prices, rebook and cancel the higher-priced reservation.
DreamCheaper estimates that its system helps guests pay up to 60 percent less than the initial reservation. Then, DreamCheaper charges the guest 20 percent of the savings that the site is able to uncover through its book, cancel and rebook approach. Everyone wins. Well, everyone except for the hotel that hopes to use the ebb and flow of supply and demand to charge rates that will keep the property profitable.
SEE ALSO: 4 Trends That Will Shape Hotels In 2015
Hoteliers have already been dealing with another startup with a much more established brand: Airbnb. While DreamCheaper doesn’t pose the same type of threat as the peer-to-peer rental service, the potential challenges of this type of service are clear. Hotel systems are built to accommodate human beings browsing for rates and a date range. These human beings may be able to compare prices on a regular basis, but the work at DreamCheaper is, like most technology, superhuman. It’s an algorithm fighting an algorithm, and the fight is always happening — every minute of the day. Based on DreamCheaper’s savings claims, its algorithm is currently winning the battle.
Now, I don’t expect business travelers, conference attendees and leisure guests to jump onboard the DreamCheaper bandwagon tomorrow. In fact, I only heard of this service because I was spending some quality nerd time on TechCrunch. The startup will need to invest some serious marketing dollars in a campaign to connect with consumers. It will also need to overcome the privacy concerns of hitting forward on an email that includes name, address and part of a credit card number. However, this is the era of affordability. Hotel guests want to save money. As room rates continue to rise in 2015, DreamCheaper’s value proposition may be enticing enough to wake up a big crowd of travelers.
What other challenges will the hotel industry face in the near future? Go to Catalyst to share your thoughts.