Mark Moses likes to book family trips many months in advance to lock in prices. In November, the 49-year-old finance executive pre-paid $189 per night for a room at the four-star Empire Hotel in New York City on Priceline.com. But over the months leading up to his April trip, he cringed as he watched New York hotel prices steadily plummet, currently hovering around $150 a night for a comparable four-star hotel.
"I was a little annoyed that I was so impatient," says Mr. Moses, of Pleasanton, Calif.
The recession is upending longstanding buying patterns in the travel industry. Instead of booking far in advance for the best deals, travelers can often find cheaper hotel and airline deals if they wait until later, even up to the last minute. Over the past several months, consumers have discovered that if they can be flexible about dates, exact hotel preferences and destinations, they can often take advantage of dramatic price drops across the travel industry.
It's not clear how long the trend will continue. Already, some airline executives are predicting that travel will rebound this summer, driving up airfares and hotel prices. But for now, travelers are finding that procrastination can save money.
"Your chances of getting a deal at the last minute are certainly better than they were a year ago," says Genevieve Shaw Brown, senior editor at Sabre Holdings Corp.'s Travelocity.com. "Because of the downturn in leisure travel there are fewer full planes and hotels."
On Jan. 21, the average sale price of a domestic plane ticket on Travelocity.com was $338 for departure dates of March 14 through April 26. By March 3, the average fare had dropped 8% to $312.
Hotel purchases on the Web site followed a similar pattern. U.S. customers booking a hotel room anywhere in the world 61 days in advance of March 16 through March 30 were quoted an average price of $160. The rate dropped to an average $142 for those booking between 31 and 60 days in advance and $128 for those within 30 days of their stay, says Ms. Shaw Brown.
Generally, airlines raise prices significantly during the two weeks prior to a flight departure date, because business travelers are forced to book last minute. But lately, even those rules appear to be bending.
Nick Robinson, a 22-year-old filmmaker from Los Angeles, planned to drive to Austin, Texas, in March because he assumed booking a last-minute plane ticket was "just going to be too expensive and a hassle," he says. Instead, he found a $289 round-trip ticket from JetBlue Airways Group Inc. four days before leaving. The same ticket, with the same four-day advance booking, would have cost $439 during March last year, according to FareCompare.com, an airfare pricing Web site.
Hotels, airlines and cruise operators say they are dropping prices at the last minute because of lower demand as well as difficulty in forecasting sales. Consumers, reluctant to book in advance because of the uncertain economy, have been booking very last minute, making it difficult for the industry to predict sales volume and, therefore, rates.
The Fairmont Sonoma Mission Inn & Spa, a luxury hotel in Sonoma, Calif., says it doesn't want to encourage late booking by dropping rates last minute, but it has been forced to do so more often in recent months, says Michelle Heston, regional director of public relations. Any hotel that says it's not dropping rates last minute more often "is lying," says Ms. Heston. "It's a true catch 22."
To lock in higher-priced business, the Fairmont is focusing on selling "experience" packages. For example, the hotel has been successful selling a $1,250 three-night "sommelier package" running April 5 to 8, which offers winery tours, tastings, lunches and dinners at nearby vineyards, says Ms. Heston.
Another way companies are trying to lock in business is to offer discounts on advance bookings far earlier than they used to, including peak summer and fall travel periods. Travel companies "are actually front loading their high season," says Darren Frei, online editorial director at ShermansTravel Media LLC., a travel deals publisher.
Early Birds Pay More
But with many travel companies cutting prices at the last minute, early booking can penalize consumers who pay in advance. In November, Lake Powell Resorts & Marinas, on the border of Utah and Arizona, offered an "early bird" 20% discount on summer house-boat rentals booked by April 17 with a $100 cancellation fee. But last week, the special was extended to April 29 and the discount increased to 30%. Those who booked earlier cannot take advantage of the additional discount, the company said, unless they cancel their original reservation and pay the cancellation fee. Since a five-day summer trip on the cheapest boat eligible for the discount is normally $5,160, it's well worth paying the cancellation fee: With the 30% discount the five-day rate drops to $3,612.
To hedge against future price drops, travelers have a growing number of options now offered by travel Web sites seeking to grab market share from competitors.
Credit For Price Cuts
The programs promise to automatically reimburse travelers if they book an airline ticket or package and another consumer books the exact same ticket or package at a lower price. Because another traveler must purchase the same combination of travel, not all purchases on the site are protected if the price later falls.
Although many domestic airlines charge at least $150 to cancel or change a ticket, Southwest Airlines Co., Alaska Airlines Inc.'s Alaska Airlines and JetBlue will credit any price drops toward a voucher or future ticket. Free Web site Yapta.com will track tickets and alert travelers when prices drop enough for consumers to benefit from a refund. Travelers must alert the airline or pay Yapta $15 to do so.
Mr. Moses says Yapta has been indispensable in recent months because he often flies Jetblue out of Oakland, Calif. He bought his ticket to New York in September for $589, but after Yapta emailed him about price drops over the past few months, he has received five credits worth a total of $213 from JetBlue for future tickets.
Write to Sarah Nassauer at email@example.comPrinted in The Wall Street Journal, page D1