Dollar Scholar Asks: Can Travel Booking Sites Like Expedia Actually Save Me Money?
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This is an excerpt from Dollar Scholar, the Money newsletter where news editor Julia Glum teaches you the modern money lessons you NEED to know. Don't miss the next issue! Sign up at money.com/subscribe and join our community of 160,000+ Scholars.
Like any pop music connoisseur, I am a huge fan of Olivia Rodrigo.
It runs deeper than thinking “drivers license” is kinda catchy — SOUR dominated my Spotify Wrapped last year. I own a bucket hat that says “it’s brutal out here”; there’s an “OR” sticker on my HydroFlask. I’ve watched both seasons of High School Musical: The Musical: The Series. Recently I’ve even begun calling her “Liv” in conversation, like we’re friends on a nickname basis.
But when tickets to her upcoming tour went on sale in December, they sold out before I could get one. As I write this, the cheapest seat on StubHub for her April 27 New York City show is over $400. Before fees.
It’d legitimately be cheaper for me to buy a ticket to a show out of state, fly there and get a hotel room for a night than it would be to see her in NYC.
So, naturally, I’ve been looking into doing that. As I’ve been conducting my research — anything for my girl Liv — I’ve found myself visiting sites like Expedia, Hotwire and Travelocity. I realized, though, that I don’t know much about how they actually work… or the deals they could potentially provide.
Should I use travel booking sites to plan my trips?
Tim Leffel, the author of The World's Cheapest Destinations, agreed to help me tackle the pros and cons of these one-stop shops. He says the value of the sites depends on the type of vacation I’m taking and how much legwork I’m willing to do.
“If you don’t have the time or inclination to hunt down the individual pieces of your trip, it’s a good way to work it out in one place,” Leffel says.
The sites are often called online travel agencies, or OTAs. Leffel says OTAs can be particularly helpful if I’m bundling services, like flights, a hotel room, car rental and excursion in a destination city. They can also work well for young people like me who haven’t done much business travel or established themselves with a loyalty program that rewards repeated stays with a certain chain.
Sometimes OTAs have rates that differ slightly from the hotels’ sites because they aren’t synced up.
However, travel analyst Mark Murphy says the prices a site like Expedia will show me are generally pretty close to what I’d get if I navigated to, 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, meaning they’ll honor any discounts I find elsewhere. Wyndham’s website says, for instance, “if you book directly on our site or via 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 is 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 listings; I browse by location, price and (if applicable) hotel star level and lock in a reservation without knowing the details.
Leffel says hotels and car rental companies use opaque sites to move unsold inventory — “if there are hotels only at 30% occupancy and they want to get it higher without publicly lowering their rates,” they’ll team up with a Hotwire-type service.
The result? Extremely cheap prices for me, the consumer.
Opaque sites aside, the downsides of using OTAs often outweigh the benefits.
First of all, there’s not quite as much competition as I might think there is. Expedia Group owns Hotels.com, Travelocity, Hotwire, Orbitz, ebookers, CheapTickets and Trivago, among other sites. Competition generally drives down prices as outlets slash rates to score customers, so the fact that they're all under one umbrella lowers my chance of finding a spectacular deal. (It also means it's probably a waste of time to check every single one of these OTAs individually.)
But perhaps the biggest con has to do with the mechanics of pricing. Murphy says when I book directly with a hotel, the hotel gets 100% of my money. When I book through an OTA, the site takes a commission.
That means, “in the eyes of the hotel, you’re a lower-revenue-yield traveler — you get less priority,” he says.
This can translate to smaller rooms in worse locations (aka by the elevator, overlooking a dumpster, etc.). It can also have ramifications for customer service. Hotel employees may be less likely to offer perks or bend the rules for me if they see on their computer screen that I used an OTA.
And in the event that something goes wrong on my trip — like, say, a pandemic happens, I need to change plans or flights get canceled — it can be hard to contact customer service to get a refund.
The bottom line
With a few exceptions, travel booking sites — or OTAs — generally don’t offer much better deals than booking directly because of the way pricing works. This is especially true if I’m looking for wiggle room and/or upgrades, because entities like hotels are less inclined to cater to my whims if there’s a third party taking a cut of my payment.
Even so, Leffel says it never hurts to take 15 minutes and check prices in various ways using various sites.
“As always, the advice is shop around and see,” he says. “It’s not cut-and-dried. You never know.”
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