Can you make money flipping hotel and restaurant reservations?

flipping reservations

A few high end restaurants in New York City and elsewhere have discovered that the reservation itself is valuable and have partnered with apps and websites like Table8, Resy, and Killer Rezzy to allow diners to purchase desirable reservation slots.  Since normal reservations are free, this is a new revenue opportunity for them.  The economics of hotel reservations are a little different; the reservation itself costs money whereas restaurants make their money on the food and drink you buy after you make a reservation.  Still, a desirable hotel reservation, like New Year’s Eve at the Wynn Hotel in Las Vegas, might be valuable to the holder in the event that the price you had the room reserved for was lower than the market itself would bear.  What are the economics of flipping reservations and is it a practical way to make money?

Flipping Restaurant Reservations

There is clearly a lot of money to be made in reservations; the hotels and restaurants charging for the reservation and the apps and website that make a cut all stand to benefit.  Is it possible though as an ordinary investor to buy a reservation (or reserve one for free), then re-sell it for a profit?  There are definitely people who have made a go of selling restaurant reservations themselves.  One man in San Francisco booked up a bunch of reservations under fake names and sold them online (and became the most hated man in San Francisco in the process).  Most of the websites and apps are actually partnered up with restaurants themselves.  There was a company called Shout that offered an iPhone app as recently as Summer 2015 that allowed users to buy and sell restaurant reservations.  However, it seems to have mysteriously disappeared from the App Store and its Twitter account hasn’t had any postings in months.  Killer Rezzy is partnered up with a few restaurants but also allows you to post your own reservations for sale.  However, even in its main market of New York City, there are only 7 reservations currently posted.  Most are only $5.  The market is just not developed yet.  Beyond that, the only other viable market is probably Craigslist; however, do a Google search of Craigslist reservations and nothing really shows up.  There is a story of one gentleman who booked a bunch of Valentine’s Day reservations in St. Louis, only to face the wrath of restaurant owners, OpenTable, and other critics, and eventually to have his posting deleted by Craigslist.

Flipping Hotel Reservations

On the hotel side, there is probably more of an opportunity in flipping reservations.  There are already a couple of sites (Roomer, Cancelon) which allow you to sell your prepaid hotel room reservations.  Buyer are on the site looking for great deals on hotel rooms, below what it would cost to book the room through the hotel or other travel websites.  Sellers just want to recoup a portion of the costs they paid for the hotel room.  So they are typically selling at a loss.  While it is possible to buy the hotel room at the retail price and then flip it to another traveler once the hotel is sold out, I have yet to find any examples of this.  Hotels are generally very good at price optimization and hotels generally do not leave much money on the table.  They might reduce the price at the last minute for remaining hotel inventory or use services like Priceline to get the last few rooms booked, but are less likely to under price a room so much as to leave money on the table for a flipper.

The only real opportunity I can see in flipping is to offer to buy rooms from people who aren’t aware that websites like Roomer and Cancelon exist, or who are aware but are unwilling to deal with the hassle of selling the room to a stranger or the risk of being stuck with an unsold room.  In this case, if you studied these websites enough to get a good idea of how low the price needs to be to sell a room, you could offer a price that would leave you with an adequate profit.  You would probably be the only buyer out there and the sellers expectations would probably be pretty low, so it certainly is possible that you could get the reservation at a low enough price.  The big issue is going to be finding people to buy the reservations from.  The first place that comes to mind would be travel agencies.  This seems like a service that would be attractive to them, if you could instantly save their clients’ money.

 

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