Nothing Special

I Won!

www.offandaway.com is a very interesting site. They put luxury hotel rooms up for auction. I got wind of it last year from Techcrunch Disrupt.

I observed the site for a few days and realized that indeed excellent hotel rooms were going for dirt cheap at the auction. Given that I could not afford to pay full price ever, this was very tempting. And I had nothing to lose, because the money I spent bidding would be usable for any other regular hotel booking, if I didn't win the auction.

So I started bidding, observing and learning as I went. After about 450 bids spent on bidding on about a dozen hotel rooms (various places across the US), over several months, I finally won an awesome deal for Big Island!!

Here is how I did it and what I learnt:

This is NOT a scam

Many people tend to think this is a scam. It is clearly not and I can attest to that. It has it's own flaws, but it is not a scam. You CAN win an auction if you plan and understand properly. Keep reading.

Understand the auction

This is not a normal auction. This is a "Time Elapsed" auction. Time Elapsed auctions do not have a fixed ending time. When you place a bid in such an auction, it extends the auction deadline by a few seconds, giving everyone else a chance to bid again. Normal auctions do not.

The key insight is, that your winning is not dependent on just you bidding last - you also need other people to NOT bid, during the time period (a few seconds) that your bid added to the auction. And that is really not in your control. So your bid simply thwarts the last bidder's chances of winning, but does not guarantee that you will win.

Make sure you have enough time in the day

Auction can run for several hours. Be prepared to get glued in front of the computer during the time. My last win started at 1 pm and ended at 7 pm! I did have someone else helping me though.

Pick a weekday auction

Weekend auctions tend to end at higher prices, obviously because more people have time to sit in front of their computers on weekends or holidays.

Buy extra large bid packs

You can always get a refund for unused bids. I got it twice; it was dramatically easy.

Enter the auction as late as possible

Enter the auction at about 10% of the room retail price. Two reasons: 1) Empirical observation - a large number of auctions have gone beyond 10%. 2) Because each bid adds 10c to the auction price, at 10% Offandaway has already made enough money to cover the entire retail cost of the room. Market hence tends to adjust to that price.

Yes, there is a chance that the auction may end before 10%, and many have, but in that case you haven't spent any money on it, so it's not that bad.

Have a fast Internet connection

Internet is not perfect. Your bid may not reach Offandaway's servers fast enough, and you may lose. This is especially important if you are planning to bid towards the end.

Bid as late as possible

Never bid before you see 'GOING' on the screen. That way, you will spend way less bids and will be able to extend your runway if the auction runs longer. Many people get anxious and bid before it reaches GOING. That is a good thing for you, because you saved that bid. You can always bid sooner and increase your chances of winning, but you will spend many more bids.

The only real reason you'd not want to bid late, is to make sure that your bid indeed reaches their server, sans any Internet hiccups. If you want to be that sure, you can do that, but be prepared to shell out a LOT more bids.

Don't chase extremes

In theory, you can win the auction with just one right bid. But there is no practical way to find that moment and you should not rely on it, obviously. On the other extreme, you can also win by placing a bid every single time. But that way you will spend too many bids and will not really gain any useful cost-advantage.

Get aggressive towards the end

When auction goes beyond say 20% of the price, then bid aggressively. Your competition at that point is less and your winning is more and more dependent on how consistently you bid. At that point, start bidding a little early (say 5 seconds) and ALWAYS bid. I tried that with the one I won, and I only ended up having real competition from one person. The moment they gave up, I was the winner, simply because I kept bidding like clockwork when the price went past 20%.

Gotchas

1) There is no incentive to start bidding early. In fact, there is a dis-incentive. If you start early, you will shorten your runway, because you only have limited bids. We use this to our advantage (by entering the auction late), but that's not how it should be. When a new person enters the auction late, they come with a fresh chest, and people who have been bidding for a while, get discouraged. It's good for Offandaway, but not for bidders.

2) This is very dependent on the speed of your Internet connection, your browser and their servers. When you press 'bid', the bid may not actually reach their servers in time, simply due to congestion over the Internet, on your computer, or on their servers. I once lost an auction due to this reason.

What is the worst that can happen?

At worst, you won't win. The bids you placed are not going anywhere though. You can use them towards full price of the same room, or you can pick any other hotel (just like hotels.com or expedia.com they have the same selection of thousands of regular hotels). They also sometimes run deals upto 30% off on rooms of the same hotel, for people who do not win. If you really want to make a trip, there is nothing to lose.

Summary

Despite its shortcomings, I think this is great. I have come out substantially net positive and I now have a repeatable method to win auctions that I described above. Next time I need a vacation, I'm definitely coming back!


I can win it for you!

As you see above, I have a great handle on this. If you want, I can win an auction for you, for a small fee. If I don't win it, I won't charge you anything. Try it?

Labels: offandaway auction hotel hawaii