Why Are Hotels Cheaper When Booked Through Third-Party Sites Like Expedia and Orbitz?
When planning a trip, many travelers choose to book their hotels through third-party websites such as Expedia and Orbitz. These platforms often offer lower rates, but there's a deeper story behind these price differences. Let's explore why hotels are often cheaper when booked through third-party sites and why direct booking might be a better option.
The Secret Behind Reduced Prices
Third-party websites like Expedia and Orbitz frequently offer lower prices for hotel rooms. This is often due to agreements they have in place with hotel chains. These agreements typically stipulate that a certain number of room nights be reserved annually. In return, the third-party sites can offer better room rates to their clients.
These agreements come with benefits and challenges. Third-party sites often have access to computerized tracking systems that help them monitor and manage the flow of business to the hotels. However, these systems can also lead to price discrepancies. Sometimes, the price charged to the traveler by the third-party site is significantly higher than the actual amount paid to the hotel. For instance, one traveler was charged $1800 for a reservation and the hotel was only paid $750. This difference, known as the spread, is often retained by the third-party site.
How Third-Party Sites Operate
Third-party booking websites operate based on estimates of future demand and availability. They set prices by adding a markup on the expected room rate, then adjust the prices as the actual cost becomes known. If the actual room rate is lower than the estimated rate, the third-party site pays the hotel the lower rate and retains the difference. This practice can result in significant discrepancies in pricing, often to the traveler's disadvantage.
The Disadvantages of Third-Party Bookings
While third-party sites can offer lower prices, they often come with certain drawbacks. Not all hotels will be cheaper when booked through third-party sites, and there are important factors to consider. For example:
Room Type Discrepancies: When booking through a third-party website, you may not be guaranteed the exact room type you requested. The third-party site may not always have access to the hotel's reservation and cancellation policies, leading to potential issues.
Amendment and Cancellation Policies: Changes or cancellations made through a third-party site may not be honored by the hotel. In such cases, you may have to call both the third-party site and the hotel to resolve issues, which can be time-consuming and frustrating.
No Knowledge of Special Deals: Third-party websites often lack information on special deals or promotions the hotel may be offering. Direct booking ensures that you can take advantage of any discounts or specials the hotel is running.
Additionally, direct booking is often more beneficial for travelers as hotels are more likely to offer better rates when booked directly. In fact, hotels prefer direct bookings because it ensures a continuous revenue stream. To take advantage of this preference, you can ask for a price match if you find a cheaper rate elsewhere, provided you can present proof of the lower price.
Conclusion
When it comes to booking hotels, it's not always cheaper to go through third-party sites like Expedia and Orbitz. While these platforms can offer lower rates, they often come with hidden costs and inconveniences. Direct booking through the hotel's website or by contacting their reservation department allows you to better manage your reservations and potentially take advantage of special deals.
Ultimately, the decision to book through a third-party site or directly with the hotel should be based on your specific needs and circumstances. Whether you're looking to save money or avoid potential booking pitfalls, understanding the nuances of third-party booking can help you make an informed decision for your travel plans.