Thinking about booking your next summer getaway? Are you accustomed to using online travel booking sites like Expedia or Orbitz? Here is why you should think twice.
Travel booking sites charge high commissions when they book rooms on behalf of hotel companies, that is why the hotel industry has declared war on online travel agencies. hotels are offering lower deals and better perks to members of their loyalty programs that book directly to woo customers.
Booking directly or choose a third-party booking site?
The choice between booking directly with an airline or hotel and going through a third-party depends on your openness and your age, sais Mark Blutstein, a research analyst with travel research firm Phocuswright.
Airline tickets or reservation of the hotel room directly are most likely made by older travelers and those who have racked up loyalty or reward points. On the other side, younger travelers are obsessed with the price. That is why they choose sites where they can compare the prices. “They’re looking for the best deal they can get,” Blutstein said.
Booking with a third party site is not so advantageous as booking directly with an airline or hotel that can yield significant benefits.
Advantages to booking directly through a hotel or airline
Consumers often choose from among three different rates, said Bjorn Hanson, a professor with the New York University Preston Robert Tisch Center for Hospitality and Tourism. These include a public rate with no discounts, a discounted rate for members of loyalty programs, and a discounted non-refundable rate. Hanson affirms: “Almost always, one of those three will be as low or lower than the rate through an online travel agency for a similar arrangement.”
Booking sites charge hotels a commission for the booking they get, which is 15% on average, Hanson said. Therefore, hotels often don’t offer up their best deals on these sites, since they are already charged for placing their offer. Dara Khosrowshahi, chief executive of Expedia says: “There’s some price cutting we’re seeing in the marketplace to drive direct bookings.”
Why use third-party travel sites
Third-party sites remain a great search tool. It may be the most effective way to compare prices. Even travelers who are inclined to choose a particular hotel or airline can benefit from research on these sites, especially in instances where a preferred chain or carrier is not available at their destination.
A search on Booking.com, for instance, can help a traveler figure out which hotel or airline has the best deal, and then they can book directly. One must know that there are sites that operate like travel agencies (Expedia or Priceline.com) and sites that simply perform searches. On Kayak, consumers can research their options, but the actual bookings go through the company promoting the deal in question (which can be a hotel or air carrier or another online travel agency like Priceline.)
There are situations in which booking travel through a third-party site can occasionally be cheaper. For instance, online travel agencies can sometimes afford to layer on their own discounts, offering potential savings. Lulla affirms: “Because they have such high margins, sometimes they take a few dollars out of the rate they’re supposed to charge the consumer”.
Choosing a third-party booking site may not be cheaper, but is more convenient when it comes to searching and planning. Also, they help you compare prices.