When you set out on a trip around the world in 2015, it’s 10 times easier than it was to set out on one in 1995. (See 21 things travelers couldn’t do 21 years ago.) You have access to reams of information at your fingertips and you can book most of your major transportation tickets and places to stay in advance.
But should you?
If you really want to keep your budget low, no. As this trade article on The Evolving Landscape of Online Bookings points out, we only think we have lots of choices when we book online. The reality is that Travelocity, Orbitz, Hotels.com, Hotwire, and Venere are really all just parts of Expedia now. (Trivago is part-owned by them too, but their model is to give equal weighting in searches—they only make money from sending traffic—so they can’t favor any one player.)
Goliath TripAdvisor owns (take a big breath if you’re reading this out loud) AirfareWatchdog, BookingBuddy, CruiseCritic, EveryTrail, Family Vacation Critic, FlipKey, The Fork, GateGuru, Holiday Lettings, Holiday Watchdog, Independent Traveler, Jetsetter, Niumba, Onetime, Oyster, SeatGuru, SmarterTravel, Tingo, Travel Pod, Tripbod, VacationHomeRentals, Viator, VirtualTourist, and Kuxun.
The main competition for these bulging monsters is Priceline. They also own Agoda, Booking.com, Kayak, and OpenTable.
Can’t find a good price with Hostelbookers so you’ll just pop over to Hostelworld and try that instead? It’s kind of pointless: they’re the same company. A worldwide hostel booking monopoly.
HomeAway has swallowed up much of its non-AirBnB competition, now owning VRBO, VacationRentals.com, OwnersDirect.co.uk, Stayz.com.au, and even BedandBreakfast.com.
This consolidation has been a boon for the companies. They’re raking in record profits as travel picks up and Wall Street loves them.
But do you know who’s paying for all those profits?
Cutting Out the Middleman
The commission a hotel or hostel pays for each booking ranges from 10% to 25%, with many of them falling close to 20. So every time you book a $50 room somewhere, the online agency is probably getting $10 of it. If it’s a $10 dorm room in a hostel, the owner is probably only receiving $8—before paying expenses to run the place. If you booked it for seven nights in advance, he or she pays that commission on every night.
Do you see now why that independent hotel or hostel will be ready to strike a deal with you if you walk in at 5:00 pm and say you want to stay for a few nights in a row? Can you imagine how much leverage you have if you’re going to stay there a week?
For Hilton or Hyatt, these commissions are something to grumble about at board meetings and try to negotiate each time the contract comes up. For those not part of some big chain though, these commissions can wipe out most of their profit margin. They need the OTAs because the companies have millions of customers and huge traffic from people ready to book. But the owners hate that they need them because it’s so costly to get customers that way. The really small ones don’t even sign up: they’re invisible if you’re doing all your searching via a website owned by Expedia or Priceline.
So here’s what you do: print out or do a screen capture of the best rate you found online, call or walk into the hotel/hostel with that rate, and ask if they can beat it. Unless the owner or front desk manager is a complete idiot, the worst that can happen is you will pay that rate and get a better room out of it. Because you’re there before you’ve paid, you can see the room first and ask for an upgrade even. If you’ve ever had a sales job though, you’ll probably pay less than you would have by booking in advance just for negotiating a little, especially if you’re staying multiple nights.
Same goes for a vacation rental apartment or house: a bird in the hand beats an empty apartment with fixed costs that need to be covered.
A good hybrid approach is to book the first night or two of where you’ll be staying online, then go arrange a better deal for the rest of the time. Another hotel/guesthouse/hostel or an apartment for a longer term. In either case, you can look at it before laying down your money.
There are caveats to this of course: it sometimes won’t work with big chain hotels, especially in the USA, because of OTA contract stipulations. Judging by that article I linked at the top though, this may change too if what’s happening in the courts of Europe spreads across the Atlantic since this is viewed as an unfair business practice. Hotels that are independently owned are a different story, however. The chance of you walking back out the door may mean the difference between that day being a profit or a loss. Owners hate leaving beds empty if there’s any chance of filling them, even at a lower rate. (It’s the whole reason Hotwire and Jetsetter exist—to fill rooms that would otherwise be empty.)
The other big caveat is that it may be high season, a time when all rooms will be full. You have no leverage in these situations, so book as far in advance as possible.
What About Flights?
This has been all about hotels, but one last thing to remember. In 2005, we would walk into a travel agency in Bangkok, Calcutta, or Cairo and buy a plane ticket to where we were going next. Flash forward 18 years and we did the same thing in Siem Reap, Cambodia to get a ticket to Vietnam. Why? The price we got through the local agency was $50 less per person than anything we could find online. Unless you can log in and read the local language, you’re probably getting your home country’s price. Not the agencies though: they know the ins and outs and local deals.
Just because you seem to be looking at all possible choices online doesn’t mean you really are. It’s often an illusion. A costly illusion if repeated over and over for months on end.