The hotel deals are getting sweeter on Priceline and Hotwire.

According to the New York Times, travelers are getting better deals than ever on “opaque” travel sites like Hotwire and Priceline, so called because the consumer can’t see the hotel or airline’s name until she has purchased their product. Retail prices are down and more rooms and flights are going unsold, so more inventory ends up on these sites at steeper and steeper discounts.

Travel companies feel they can unload inventory on these sites without tipping off competitors to their discounts or undercutting their regular prices. But I wonder. For the first point, I think travel providers must have a pretty good idea what discounts their competitors are giving on Hotwire. After all, savvy consumers know what hotels sell for what on these sites – they can find out from other travelers on forums such as Biddingfortravel.com or Betterbidding.com.

The second point may be an even bigger worry. As companies in all fields look to cut costs, you can bet some are using Hotwire and Priceline to book corporate travel. And once they find out that it’s easy and generally satisfies, who says they’ll go back to paying premium prices after the economy picks up again? Even if the traveling employee sometimes looks up reviews of the hotel and objects, if she’s not the CEO, the company will probably care more about the money they’re saving.

It seems like in every recession, companies learn how to operate more leanly and don’t necessarily forget that learning in good times. I remember when the in-house travel agent at the company I worked for didn’t even bother looking at Southwest fares. He had his regular agent at United, and he just went ahead and booked a refundable, top-tier fare. How many companies ignore discount carriers today?

Fees are heading up even as fares are coming down.

Everywhere you look lately, there’s a new airfare sale being announced. And if you’re a savvy customer, you know that a drop in fares can benefit you even if you’ve already bought tickets.

That’s because airlines will refund you the price difference if you call and ask. But, always looking for fees to recoup the costs of fare sales, the airlines have started tacking on ”administrative fees” of up to $250 for price adjustments, often eclipsing any savings you might have gotten from watching the fares.

An New York Times travel article offers several ways to stay ahead of this game: 1) Use Yapta.com, which will track the fare and email you when the price drop exceeds your airline’s change fee; or 2) Book through Travelocity or Priceline, which are providing price-drop refunds for packages under certain circumstances.

Wouldn’t it be nice if Yapta’s service worked for other areas besides travel? Like, I’d like an alert letting me it’s time to refinance my home because the falling rates have surpassed closing costs. And I’d really like a service to tell me just the right time to jump into the crazy stock market.

Come to think of it, I bet the airlines would like a service like Yapta themselves. They could find out when customer outrage is threatening to surpass the benefit of one more raised fee, when to file bankruptcy after fare competition and lagging demand have become too much to bear, or the optimal time to approach the federal government for bailout money.

But if airline CEOs do head to Washington to ask for bailouts, how will they get there? The auto CEOs symbolized their newfound humbleness by driving their own cars; would United’s CEO have to come in on a simple prop plane to signify the same? Or perhaps he’d just have to do what the rest of us do to save money and buy a ticket on Southwest or another discount carrier that has not indulged in all the fees.

After all, the airline industry comes with plenty of baggage — heavy retirement and other workforce obligations, unused equipment, the traditional hub-and-spoke systems, and a history with the bankruptcy courts. Those CEOs are going to have to check more than one piece, and with the per-bag fees at the major airlines these days, that adds up.

Photo by tylerdurden1, used via Creative Commons license.

A decision against Pitt County, NC by the Fourth Circuit Court of Appeals in Raleigh in a lawsuit won by a bunch of online travel websites, is making waves in the travel industry and in the justice system, because of the enormous significance to other similar cases pending in dozens of courts, not to mention the millions of dollars involved, and the larger question of whether states have a right to tax internet companies which do not have a physical address in-state.                                                                                                   

And this untaxed difference pocketed by online travel sites has suddenly become as important as the abortion wars, with dozens of counties having filed lawsuits (some of them class-action) against online travel websites including Expedia, Travelocity, Priceline and Orbitz, among others. None of the lawsuits, until the Raleigh appeal case, had been able to win a definitive federal decision inspite of years of litigation and hearings.

And this is not just about paying more taxes in future. Lyndhurst County, NJ collects about $337,117 a year in hotel taxes, and they’re suing travel websites (including Expedia, Travelocity and Priceline) for 5 million dollars. This is just for one County.  They’re actively trying to rope in all 147 towns in New Jersey and make it a class-action. If that happens, and then the travel websites lose the suit, can you imagine the amount that they’d end up paying in back-taxes, damages and costs? And even this would be just for one state.

Hotel Occupancy tax Lawsuit

Throw in the dozens of other lawsuits in San Antonio, Houston, Los Angeles, Miami, Atlanta, Philadelphia, and Chicago, along with class-actions by smaller counties put together, and what you have is a disaster waiting to happen – If the travel sites start losing.

Which is why immediately after the federal Raleigh appeal went in favor of the travel websites,  both sides  are now rushing to lobby the new 111th Congress.

The travel websites want to add an amendment to the $850 billion economic-recovery stimulus bill which would ban local authorities from taxing the travel websites. The Counties and Cities, for their part, are putting pressure on their Congressmen to not support any such move, so they can continue their fight through the courts.

Photo by Phillip via flickr (creative commons).