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Dave's Family Travel Tips

October 2006

At DTR Travel Inc., we are always looking for better ways to provide value added services for our customers. Sharing valuable travel information and tips is just another way to keep you informed.

This Month's Tip(s):  Not all resort rooms are priced equally

With families booking holiday and spring break vacations I thought it would be timely to share some insights to how resorts price their rooms and allocate their inventory.

When I talk about resorts, I am referring to the vacation oriented resorts in warm weather destinations like Mexico, Hawaii or the Caribbean. The same holds true for Ski resorts during ski season. A chain hotel in suburban Denver could operate under a different set of rules so yes; you might be able to get a great Internet rate in some cases.

Many consumers who have never booked with a travel professional in the past and got that great Internet rate feel if they book directly with the vacation resort, they can save money over booking through a professional. For most of the cases this is not true and here is why.

Travel professionals use major tour companies that negotiate contracts with these resorts and make commitments based on past performance to fill a certain percentage of rooms. These tour companies commit to thousands of room nights per year thus get significantly lower pricing based on volume. No big secret, this works the same as other industries who buy in large bulk.

So if a resort undercuts the tour company by offering lower rates directly to the consumer, the tour company could cancel the contract and we are talking millions of dollars of lost revenues. Resorts cannot afford to let this happen.

Does it happen? Yes, every now and then I will see pricing lower if booked direct, but I am also contacting my suppliers telling them, do you know this resort is undercutting your prices? You would be amazed how fast the big wigs at the tour company are contacting the big wigs representing the resort.

This also explains why when you call a resort directly and they are sold out, yet a professional can secure a room. With the contracts comes a commitment to the tour company to allocate a percentage of the resort's rooms to that company. The resort divides up its rooms and says tour company A has a certain percentage; tour company B has another percentage and so on. Then they keep a certain percentage to sell themselves.

So that is why you can contact 10 different agencies, the resort itself, and check online only to get many different prices and answers.   Also just like the airlines, you are looking at a moving target. The price you get one minute could change the next time you check because rooms have sold out or getting closer to departure so prices have gone up. When you think about anyone in the world can book a room at a resort 24/7, so it is not hard to believe inventory is changing by the hour.

I hope this helps take some of the mystery out of how vacation resorts price their rooms and allocate their inventory. I will spend more time on this topic next month.

Wishing you and your family a safe travels!

Respectfully,

David Rojahn, CTC
Owner
DTR Travel Inc.

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