I worked in the online travel industry for nearly a decade, and the single best money-saving travel tip I learned was how to use Priceline.com when booking hotel rooms (and car rentals). On numerous occasions, I’ve been able to stay in really nice hotels for very little.

I’ve stayed in 4- and 5-star hotels in major cities throughout the U.S. for less than $100 per night. Often times, much lower. I’ve stayed in Hyatts, Hiltons, Westins, and Marriotts for as little as $40/night and frequently no more than $60 or $70 per night. And I’ve stayed in 2- and 3-star hotels for even less. It may seem too good to be true, but it’s not. Here’s why:

Why You Can Get Good Deals on Hotel Rooms at Well-Known Chains

Most hotels are unable to book every room every night. They have excess inventory. And in fact, most hotels have vacancies throughout the year. They also have staff that they pay everyday no matter how many rooms get booked. In addition, they have mortgage payments to make and other fees associated with the general upkeep and maintenance of owning and operating a hotel.

So there’s an economic incentive to try to fill rooms that would otherwise go empty. But hotel owners don’t want to advertise to the outside world that they have lots of empty rooms and that they’re willing to drop their prices significantly to fill them. Hotel owners worry that this kind of mass discounting would damage their brands and pricing power over the long run.

How Priceline Fits In

And this is where Priceline enters the picture. Priceline’s “Name Your Own Price” product lets you “bid” on hotel rooms. It’s a private auction, and if your bid is accepted, only you, Priceline, and the hotel that accepts your bid know the price you’ll pay for the room.

This works out for you (assuming you get a room at a discounted rate), for Priceline (they take a commission on the room, since you booked through them), and the hotel (they got to fill a room that would otherwise have gone unsold, and they were able to do so without having to show the general public the discounted rate). It’s a win-win-win situation.

There is one major downside to using Priceline’s “Name Your Own Price” product, which may be a deal-breaker for some but isn’t for me — and I’m guessing won’t be for most Tip Heroes. The way Priceline’s “Name Your Own Price” product works is that you offer to pay a certain price for a specific star-level hotel in a specific area within the city or region you’ll be visiting. You don’t get to see which hotels qualify for that area and you won’t know which hotel you’ll be staying in until after your bid is accepted.

While Priceline isn’t perfect, my experience has been that almost 100% of the time the hotel I’m given matches my expectations based on the star rating I selected.

So just how does one go about getting these incredible deals on hotel rooms through Priceline? Follow the steps below (I’m using New York City as an example, but this strategy can be applied to any region in the country).

(1) Get a Feel for Current Rates

The first thing you need to do is to get a sense for what hotel rates look like for your location and time period. Search websites such as Orbitz, Travelocity, and Expedia (also check out our tip about How to Save Money on Hotel Rooms).

Pay attention to star ratings. While most websites have their own proprietary star rating system, you can still get a general feel for what hotel rooms are going for in each star rating level even if the criteria differs slightly from one website to another.

Try to develop a feel for rates. For example, in one region, you might find that 3-star hotels are generally going for $80-$90 per night and 4-star hotels are going for $110-$125 per night, etc.

And while some sites might have a hotel rated 3-stars while others have it as a 4-star, it doesn’t really matter — you’re just trying to get a feel for what rates look like within a general range.

You don’t need to spend much time doing these searches. Just try to get a quick feel for the market and then move on to step # 2.

(2) Check Hotwire

Hotwire’s model is similar to Priceline’s “Name Your Own Price” product except for one major difference: You don’t bid. Hotwire, like Priceline, uses an opaque model, where the hotels in your selected region are shielded from view and you won’t know which hotel you’ll get until you agree to the price. But Hotwire won’t let you bid a price — they provide a rate for you for a particular region during the dates you’ve selected.

Hotwire defines regions similarly to Priceline, even often using similar names. For example, when searching for a hotel in New York City, you have many regions to choose from. They both have a region called “Times Square”, which is roughly a 2 block by 10 block area in Manhattan. Try to find Hotwire’s rate for hotels in Times Square based on the star rating you’re targeting.

As a general rule of thumb, I’ve found that I can generate winning bids in Priceline by bidding anywhere from 10% to 25% below the rate that Hotwire displays.

(3) Check Priceline Message Boards

There’s a great website that I’ve followed for years called BiddingForTravel.com. It has a massive message board that is divided up by travel type (airfare, hotels, car rentals, etc.). People use this site to view other people’s winning bids made through Priceline, as well as to share their own winning bids (or failures) so others can learn and benefit from their experiences.

Go to BiddingForTravel.com and look for the message board section with the header “USA Hotels”.

Find the region where you’re looking to book a hotel. In this example, I’m looking to book a hotel in New York City, so I look for New York City in the list.

Click on the link and you’ll go to a page that has two important pieces of information. First, look for a post at the top that says the city name in all caps, followed by HOTELS LIST. So for the New York City page, I’m looking for the link that says “NEW YORK CITY HOTELS LIST”.

If you click on this link, you’ll be taken to a page that lists what the BiddingForTravel.com website operators have found to show up as winning bids in each region and within each star rating (based on posts made to their message boards):

This list will give you a general sense of what kinds of hotels you’re likely to get if you bid within a given star-rating level and region. Keep in mind that this list is not perfect and the operators of BiddingForTravel.com do not make any guarantees as to which hotels are and are not within each region. Use this list to get a rough sense of what’s out there — but realize that there may be some hotels missing or some hotels listed that are no longer in that category.

Then click the back button in your browser and go back to the previous page. Scroll through the list of posts for New York City to see if any “winning” (i.e., successful) bids are around the same time and star rating you’re looking for. In this example, I’m looking for a 3.5- or 4-star hotel in the Times Square region for late March. It turns out that there are a few posts that show successful bids for this region during this time period. Check out the image below, as I’ve highlighted a 4-star hotel for Times Square that someone was able to get for $125 per night over the same weekend that I’m looking to get a hotel.

This information is very helpful as now I have a good idea of what to bid at Priceline.com.

(4) Make Your Bid in Priceline

Between my initial searches using Orbitz, Travelocity, and Expedia, plus my Hotwire search, and finally my search through BiddingForTravel.com’s message boards, I have a good feel for what to bid at Priceline.com.

So go over to Priceline, enter in your city or region, your dates, and do a search. Then look for the “Name Your Own Price” link and click on it. This will take you to a page that has a list of the areas within your chosen region. In the New York City example, you will see a list like the one below.

I’ve highlighted the region and the two star ratings I’m looking to select (3.5- and 4-stars).

You can view a map of a specific area by clicking on the map on the right side of the page. In this case, I’ve clicked on the Times Square area and can see this particular area on a map (it’s the area with the # 12 associated with it). I know that if my bid gets accepted, my hotel will be within this 2 block by 10 block area.

Once I’m happy with the region and the star rating, I proceed to place my bid. In this case, based on all of the data I’ve found, I’m going to go with $115 per night. I know someone was successful at $125, so I’m going to see if I can do even better. (If I hadn’t found a winning bid that was similar to my criteria, I might try roughly 25% below Hotwire’s listed price on my first bid).

After you place your bid, Priceline might try to talk you out of it, telling you your bid is really low and unlikely to be accepted. I ignore this message and proceed forward with my bid.

Within a minute or two, I will see if my bid was accepted. If it is, then I’m all set. If not, I’m on to try a “re-bid”.

(5) Know How to Get “Free” Re-Bids and Bid Again via Priceline if First Bid Is Not Accepted

Priceline lets you re-bid if your first bid isn’t successful. However, in order to re-bid, you can’t just change the price — you must change your criteria by adding a second region (as an alternative option, you can also wait several days and re-bid using the exact same criteria and just change your price at that point; you can also go in as a different user with a different credit card, though you may have to clear your cookies).

I want to re-bid but I still want to only stay in the Times Square area. So what I do is look for an area that does not have 3.5- or 4-star levels. In this example, I find that Chelsea does not have any 3.5 star or above hotels. Therefore, I know it’s “safe” to add this area to my bid, as I can’t possibly get a 3.5-star hotel star hotel in the Chelsea area.

For my re-bid, I decide to go with $125 as I know someone else was successful with that bid. Fingers crossed!

(6) Spread the Word

I try to remember to post my winning bids on BiddingForTravel.com’s message boards so that others can benefit from my success (or failures, as is sometimes the case). So if you use this strategy the next time you need to book a hotel, please spread the word by posting your experiences on their message boards.

And if you have any other strategies for using Priceline or Hotwire or any other website when booking hotels, please share with the Tip Hero community by posting a comment below. And thanks for being a Tip Hero!

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Editor’s Note – One follow up point: For those who aren’t familiar with Priceline’s “Name Your Own Price” product, keep in mind that you are locked into the hotel room when your bid is accepted. Your credit card is charged and you will not get your money back if you need to cancel your reservation.