This is an excerpt from Dollar Scholar, the Money newsletter where editor Julia Glum teaches you the modern money lessons you MUST know. Don’t miss the next issue! Register on money.com/subscribe and join our community of over 160,000 scholars.
Like any pop music lover, I’m a big fan of Olivia Rodrigo.
This goes beyond thinking that “driver’s license” is a bit catchy – SOUR dominated my Spotify Wrapped last year. I have a bucket hat that says “it’s brutal here”; there is an “OR” sticker on my HydroFlask. I watched both seasons of High School Musical: The Musical: The Series. Recently, I even started calling her “Liv” in conversation, like we were friends based on a nickname.
But when tickets for his next tour went on sale in December, they sold out before I could get one. As I write this, the cheapest seat on StubHub for his April 27 show in New York is over $400. Before costs.
It would legitimately be cheaper for me to buy a ticket to a show out of state, to get there and get a hotel room for one night than see her in New York.
So, naturally, I sought to do so. While doing my research – anything for my daughter Liv – I found myself visiting sites like Expedia, Hotwire and Travelocity. I realized, however, that I didn’t know much about how they actually worked…or what deals they could potentially offer.
Should I use travel booking sites to plan my trips?
Tim Leffel, author of The cheapest destinations in the world, agreed to help me understand the advantages and disadvantages of these one-stop shops. He says the value of sites depends on the type of vacation I take and how much work I am willing to do.
“If you don’t have the time or inclination to research the individual elements of your trip, this is a great way to solve it all in one place,” says Leffel.
The sites are often called online travel agencies, or OTAs. Leffel says OTAs can be especially useful if I’m bundling services, like flights, a hotel room, car rental, and a trip to a destination city. They can also work well for young people like me who haven’t traveled much for business or who have established themselves with a loyalty program that rewards repeat stays with a certain chain.
Sometimes OTAs have rates that differ slightly from hotel sites because they are not synchronized.
However, travel analyst Mark Murphy says the prices a site like Expedia will show me are usually pretty close to what I’d get if I was browsing on, say, Hilton.com. This is because hotel chains don’t want me to see significantly cheaper prices on Expedia. They want me to book through them.
In fact, most hotels have a best rate policy, which means they’ll honor any discounts I find elsewhere. Wyndham’s website states, for example, “If you book directly on our site or over the phone and then find a lower, publicly available rate elsewhere, we’ll match the lower rate.” Plus, we’ll give you 3,000 Wyndham Rewards bonus points.
The exception to this are opaque booking sites like Hotwire. With opaque OTAs, I don’t see what I’m booking until I’ve already confirmed the order. There are no names on the lists; I browse by location, price and (if applicable) hotel star level and lock a reservation without knowing the details.
Leffel says hotels and car rental companies are using opaque sites to move unsold inventory – “if there are only hotels at 30% occupancy and they want to raise it without publicly lowering it their rates”, they will partner with a Hotwire-like service.
The result? Extremely cheap prices for me, the consumer.
Opaque sites aside, the disadvantages of using OTAs often outweigh the advantages.
First off, there’s not as much competition as I might think. Expedia Group owns Hotels.com, Travelocity, Hotwire, Orbitz, ebookers, CheapTickets, and Trivago, among other sites. Competition usually drives prices down as outlets reduce rates to mark up customers, so having them all under one umbrella reduces my chances of finding a spectacular deal. (It also means it’s probably a waste of time to check each of these OTAs individually.)
But perhaps the biggest drawback has to do with the price mechanics. Murphy says when I book directly with a hotel, the hotel gets 100% of my money. When I book via an OTA, the site takes a commission.
This means, “in the eyes of the hotel, you are a low-income traveler – you have less priority,” he says.
This can result in smaller rooms in worse locations (i.e. near the elevator, overlooking a dumpster, etc.). It can also have ramifications for customer service. Hotel employees may be less likely to offer benefits or circumvent the rules for me if they see on their computer screen that I have used an OTA.
And in the event that something goes wrong during my trip – like, say, a pandemic happens, I have to change plans, or flights are canceled – it can be difficult to contact customer service for a refund.
The bottom line
With a few exceptions, travel booking sites – or OTAs – generally don’t offer better deals than direct booking due to the way the prices work. This is especially true if I’m looking for wiggle room and/or upgrades, as entities like hotels are less likely to cater to my whims if a third party takes a cut of my payment.
Even so, Leffel says it never hurts to take 15 minutes and check prices in different ways using different sites.
“As always, the advice is to shop around and see,” he says. “It’s not cut and dried. We never know.”
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