The Illusion of Choice When You Book Travel in Advance

Expedia gobbling up rivals

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.

hostel booking monopolyThe 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?

Eventually, you.

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.

Comments
  1. Dean

    This is an excellent article, only downside is if you are planning on staying for a long time some of the airbnb etc. places could be full later on so your one night and mae a deal if you like it could go up in smoke. Airfare? for example none of the sites include budget airlines like Spirit (USA) or Viva Colombia (Colombia) or Ryan Air (eutope) and others. It is too bad that local governments won’t list all the cheap hotels-hostels so we have a choice before arriving.

  2. Samantha

    This is absolutely true. I found this out in Montagu, Cape Province, Sout Africa in 2012 quite byu accident. I went to the hot springs for the day with my two kids and we stayed far too late. So I went into the adjoining hotel to see what the rate was. It was exhorbitant, so I asked one of the Springs assistants if there were any local B and B’s that were any good. I went to the hotel reception and asked for the contact number of that place. The manager had arrived on the scene. He consulted someone else and then offered me a room with a double bed, huge couch and en suite bathroom with dinner and breakfast included at a huge discount. It was so affordable we ended up staying for 3 days. Thanks, Tim, for sharing that tip. I thought it was a one hit wonder. I detest how so many kids don’t get to experience travel or holdays because of the big, bad and ugly conglomerates.

  3. Jeremy

    I think sometimes people see the rates posted at the front desk and think they’re real–that people actually pay that amount to stay there. In most cases those rates are just for show and most people walking around the lobby are paying 2/3 or 1/2 that amount. You just need to ask for a manager and start negotiating.

  4. Gary Wodnick

    Yet another brilliant article. Thanks, Tim.

  5. Scott Gunter

    VERY informative Tim! Thanks, S

  6. Gary

    One thing I’d like to add …

    … have the courage to be upfront, and sometimes blunt with Airbnb /VRBO hosts about what you want to (or can) pay. I’ve been finding fairly high asking prices for properties I’ve been interested in – yet in my inquiries, I’ve been upfront in stating what I can afford, along with the claim that my wife and I aren’t hosting a frat party, and that we’re responsible and trustworthy. More often than not, our hosts have been willing to come down considerably on their asking prices. If not, just move on.

    Lastly, when we freewheel our travel plans, I can’t emphasize enough my agreement with Tim on being on exploring options after arrival. Our BEST experiences have happened when we simply walk up to a property, ask to see an offering and upon our approval simply ask, “what can you do for us?”

    Self-confidence leads to the better outcome.

  7. Hermes

    Thanks for the information Mr. Leffel.

    Reminds me of when I forst visited Hong Kong in the 1990s and booked a room in Shenzen via the state travel agency of China. As soon as I walked in I saw my folly – *posted* rate was half!

    I used to spend 3-4 hours hoofing it in a new city trying to find the best deal (I am very fussy about mattress and smell) but now as I am an old man instead I often book at least one night. Actually two in problematic cities is better because if I arrive in the evening (cheaper fare) I don’t want to spend my first full day in a strange city looking for accommodation. Co-incident to your own advice I do the same – print out my findings from the monster companies then hit the pavement. I don’t like blind dates!

    For me, the big reason to not book for than a few days (if at all) is that you never know what a place will be like until you stay there. Disco open to 4 am? Mold? Slamming doors? I don’t even believe reviews anymore. I think it has probably turned into an industry. Choose a place with mediocre (but not horrible) reviews to save a few bucks.

    It’s not aways easy – Mirador (Chunking’s neighbour) Mansion I spent two hours knocking on doors during a high occupancy holiday. Finally someone took pity on me and offered me her room at a discount even though the place was full. What worked? Telling her I needed the room only for X hours and that I would be checking out at 6 am to catch a plane.

    In my experience having visited over 23 countries, and having lived and worked in four of those in SE Asia, low-mid hotels (in Hanoi for example), typically *not* run by the government or corporations, are happy to give you a deal for a longer stay than several days. I don’t expect this in a hostel or a 4-star plus. And if you treat the staff and manager respectfully and especially if you intimate that you like to write reviews, they will ‘roll out the red carpet’. What also helps to get a discount after your contract with the online agency if over is saying something simple and truthful to guests considering moving in while your’re in the lobby. Example: “The shower is steaming hot, give it a minute or too and it’s wonderful.” In earshot of the manager of course. But I don’t talk up the place (that would be suspicious). Just say my brief praise and leave.

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