Priceline offers them a clever way to charge different prices to different customers, based on their willingness to pay. Economists call this price discrimination. To work, it has two requirements. One is a way to figure out the different amounts people are willing to pay. The second is a market that is at least somewhat uncompetitive.
Airlines are a classic example.
On a typical flight, a big airline may charge dozens of different fares. The key for the airlines' large staffs of pricing specialists is sorting price-sensitive fliers from those who aren't. The extra cost of flying those seats with bodies in them is almost nothing, so a ticket sold at almost any price will be profitable. It finds out how much each customer is willing to pay by the brilliant technique of asking. And it keeps the higher-paying customers away from the bargains by making the process such a pain.