Are you getting the best deal when you book through an online travel agency?
When you’re shopping on an online travel site, does everything look the same? It does to Ron Woods, a retired insurance salesman from Walnut Creek, Calif.
Over the years, he has watched with concern as they merged. Airbnb bought HotelTonight. Booking.com acquired Priceline.com, Kayak.com and Cheapflights.com. And, of course, Expedia.com purchased Travelocity.com and Orbitz.com.
Woods, like many other travelers, is frustrated when he sees the same fare or hotel rate across several sites, no matter how hard he looks. That’s great if you own stock in one of these online travel behemoths, but not so great if you’re a customer and there’s no competition.
“What value does an online travel agency offer?” he wonders.
He’s not the only one wondering. Has a wave of mergers and acquisitions killed competition? If not, then why does everything look the same? Why do you find the same rate across several sites? Also, do travelers looking for summer deals have options other than those offered by large online travel companies?
“The online travel market is very competitive,” says Steve Shur, president of Travel Tech, a trade group for online travel agencies. He acknowledges that there have been “some mergers and acquisitions” in online travel services, but he says the sites continue to jockey for your travel dollar.
In fact, only one in five bookings is made through online travel sites like Expedia, he says. An additional 10 percent are corporate agency bookings, but the balance are direct bookings, in which travelers like Woods click directly on a site such as Marriott.com to reserve a hotel room.
Shur says online agencies are useful because they allow for comparison shopping, something you can’t do when you book directly. Online agencies can also bundle various components, such as airline tickets, hotel rooms and activities, to offer more value.
Case closed? Not quite. There’s no question that when it comes to booking travel through an online agency, it feels as though customers have fewer choices than they use to. Some observers have even called Expedia and Booking a duopoly, implying that they have a stranglehold on the online travel market. But a closer look at the competitive landscape suggests that players such as TripAdvisor and Google are giving the big names in online travel a run for their money — and keeping things competitive, at least in the short term.
By the way, there’s an explanation for the sameness of the deals. Rasmus Juul-Olsen, CEO of the Danish online travel agency Bookmundi.com, says agencies display similar prices because the inventory and prices come from the same sources. “At times, however, some third parties are getting special or exclusive discounts,” he says. But the agencies continue to compete with one another for your business.
So what are your options for booking summer travel? The conventional wisdom has been to start your search with an online travel agency. The sites let you query a variety of travel suppliers for the best option. If nothing else, the results will give you an approximate idea of how much you should expect to pay.
But that strategy may not always work, says Stephen Fofanoff, who manages the Domaine Madeleine, a boutique hotel in Port Angeles, Wash. Fofanoff and many other hotel operators contend that Expedia and Booking.com are monopolistic companies that limit competition and drive up the cost of hotel rooms. “Travel sites, quite frankly, are creating a hidden 20 percent tax on travelers,” Fofanoff says. That’s the cost of commissions and other fees paid to online travel agencies.
In 2016, a California hotel operator filed a proposed classaction lawsuit against Expedia, alleging that the online agency purchases bogus advertisements promoting deals at unaffiliated properties. When customers attempt to book the advertised deals, the lawsuit alleges, Expedia claims that they are sold out and diverts customers to its partner hotels instead. A federal judge in March partially certified the class-action suit.
Hotels are fighting back. For example, if you’re headed up to Sun Valley, Idaho, this summer, the Hotel Ketchum offers a special rate for guests who book directly. It includes a 5 percent discount, a “VIP” welcome gift, late checkout and waived pet fees. The hotel can afford to cut its rate and add a welcome gift because it’s saving 20 percent by getting the booking directly.
Maybe the strategy of starting your search with an online agency is outdated, experts say. “Sometimes it makes sense to book with an online agency,” says Jared Nusinoff, founder of the Toronto tour operator Out Here Travel. That’s true when an online agency has negotiated a better deal by bundling air and hotel accommodations into a package.
“For individual hotels, flights or cars, it can sometimes appear you are saving money, but usually you aren’t,” Nusinoff says. “Rather, you are really inflating prices in the long term and adding more terms of service and service issues.”
Nusinoff and other experts advise starting your search with a preferred travel company, and then checking with an online agency to make sure the price is as low as possible. And cast a wide net. For example, instead of searching only major online agencies like Expedia and Priceline, go to Google Flights to find out if there’s a better flight connection. The reason is simple: Experience tells us that your online agency might not have access to all the available inventory.
Even if you think you’ve found the best deal on an online site, consider one final step: Call your travel agent. Professionals may have access to deals you can’t find online. As an added benefit, that travel expert will advocate for you if something goes wrong on your trip.