How do travel apps that claim they can book, for example, a hotel for cheaper than the original price, do it? Is it legit?
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As someone who used to (pre-pandemic) work not only in the travel industry, but in the wholesale division, I think I can answer pretty clearly for you. Now my part off the division was to sell back to travel agents (so when your travel agent calls someone to book your room, they were calling me), not in the part that contracts the hotels, but I worked with those guys close enough to have learnt what’s happening.
Hotels have known that for a couple of decades now, that if they force customers to book only directly through them, they won’t make a lot of sales, so they have to get on as many platforms, or at least on the most popular platforms to make money.
These platforms all demand a commission, ranging from 5%-30% usually. Most commonly I found 20% in all of the Americas, Europe, Australia, and New Zealand, and 30% in Asia. (My company didn’t do Africa so I can’t say anything about there).
Less than 20% was for popular hotels offering deals, so they were already making less than usual and would force us to make the lesser amount too. Now I say popular hotels specifically, because we would refuse to contact any unpopular hotel offering a commission that low because it clogs up our inventory without making us enough money.
So now that I’ve explained all that, I can explain what happens with some hotels being the exact same price everywhere (so Expedia, your local travel agent, booking direct, etc), vs when the prices are wildly different across each platform.
Many hotels insist you absolutely must advertise at the same rate as them. So let’s say, Best Western Springfield USA. Best Western Springfield is selling 1 night at $100, they sell it to Expedia at $70 and your travel agent at $80 and xyzbookingsite at $90, they tell everyone they have to sell it for $100, and they do because they have to. This is why some hotels are the same price everywhere.
Now many other hotels don’t care, and they know they have to pay you the 20% (or whatever) commission, or you won’t sell them. So the Comfort Inn in Springfield USA is selling 1 night at $100, they sell it to Expedia for $70, your local travel agent for $80, and xyzbookingsite for $90. Everyone knows the knows the Comfort Inn in Springfield is not the most popular one in town, but it’s still good so they want to try to sell as much as they can which they do by lowering the price. Expedia thinks, well we can afford to only make $15 on this booking, so we’ll sell it for $85, your local travel agent advertises for lower than the hotel at $95, but will go down to $85 if you ask for a better deal, because they know they’ll still make $5 from it. Xyzbookingsite is just starting up, but they still want to look cheaper than the hotel directly so they only make $5 and advertise for less than the hotel directly at $95.
Edit: so really like u/tomalator said, where possible, book direct. If the hotel is $100 everywhere including the direct site, book direct so they can make more money, it also makes your life easier if you want to change something or if something goes wrong, because they don’t have to deal with another company and your booking is all directly in their system. However unlike what this user said, if the price is much cheaper on a website you trust and you would rather save a big chunk of money, go for the deal because when it comes down it, you probably have less money than a whole hotel and it will be more worth it to you to take the saving.
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