2. 1. Travel auctions' history Reverse Auctions Following on from the success of normal auction web sites, it is not surprising that attention soon turned to reverse auctions where buyers name their price and invite suppliers to bid for their customer. Travel Most Successful The travel category has been the most successful reverse auction items, as it is for normal internet sites like LastMinute.com. The product is a commodity, uses well known brands (airlines or major holiday companies), is of high value with the potential for significant savings, it is easy to deliver the goods (the tickets), the item is perishable and there is over supply.
3. 2. How do they work? A company selects generic categories such as a stay. It then negotiates with a number of suppliers who would be interested in selling to customers at a very low price. To give supplier flexibility, the company usually has restrictions on buyers or the product. For example, with travel tickets it does not allow users to use frequent flyer programes, select a preferred airline, or receive refunds. Then, customers select their criteria for what they want (travel, hotel, etc) and companies check if the price proposed corresponds to the products they offer.
4. 3. Priceline.com - types of hotels you found on the site Priceline proposes a large range of hotels, from the * to the ***** hotel. Hotelscanalsobeselectedaccording to their brand or name Pricelineboth proposes famoushotels brands and lessknownhotels brands.
5. 4. Sites that give customers advice on using reverse auctions DynamicPricingexplainscustomerswhatis a reverse auction and how do reverse auction sites work. (http://www.managingchange.com/dynamic/auctions.htm) Epiqexplainswhat are the interests for bothbuyers and sellers to use reverse auction (http://www.epiqtech.com/reverse_auctions.htm)
6. 5. List the key points Customers createonly a projectdescription Buyers have to compare the bid and what they include Buyers can communicate with bidders so that they can refine their bids or offer clarifications Price may be an important factor in the decision but other elements, such as added services, must also be taken into consideration Buyers need to be cautious and read the proverbial fine print involved in the bids
7. 6. Conclusion If a hotel wants to best participate in a reverse auction, it has to adapt its services to customers’ expectations. It also has to negotiate lower prices as possible with suppliers. It has to keep in mind that it is better to sell a service for a low price than to not sell it at all. All hotels have equal access to buyer’s invitation to tender.
