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Travel Smarts: Why do hotel rates vary on the Web?

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You’ve found a great budget hotel in Paris and you’ve searched around on CheapoSearch for the best rates from different booking agencies for your dates.

And then it hits you: How can there be different rates for the same dates in the same hotel? And why are these small hotels offering booking with online agencies, anyhow?

A little back story

Ten years ago, most small, independent and family-run hotels in Europe weren’t on the radar for most first-time tourists to a city. They were simply too small to work with travel agencies or weren’t fortunate enough to be selected by the handful of travel guidebooks that recommended hotels for the first-time “independent traveler.”

During the past decade, these same hotels developed their own websites, presenting photos, room descriptions, and prices. Most built in some sort of booking form, as well. When we would visit them to inspect for EuroCheapo, many hotel owners and managers would explain that they didn’t need to work with online agencies, as they had their own websites.

Eventually, however, this wasn’t enough to really compete effectively for tourists. After all, tourists were flocking to online reservation websites, where they could compare hundreds of hotel rates in one city without having to go from one hotel’s website to another and check dates and rates.

And so, most of these small hotels realized that it made sense to offer booking with at least one online booking agency, like Venere.com or Booking.com (both of whom we work with in our “CheapoSearch” hotel search engine). When they did, the hotel found greater exposure (and more reservations) than they could have found on their own.

Once they offered booking with one of these agencies, they often were quick to realize that they could get additional exposure by offering reservations on another, and another, and another.

The booking scene today

The result is that today, many smaller hotels offer online booking with multiple booking agencies. To further complicate the issue, most of the agencies charge the hotel a different commission for their reservation services, often causing the hotel’s final rates to fluctuate from one agency to the next.

Travelers notice this when they comparison shop — and see a room at the Hotel Paris for €95 a night with one agency and €90 with another.

Ironically, booking the room over the telephone sometimes results in a higher price. After all, on a search results page online, hotels have to compete with each other for your attention. Over the phone, there isn’t the same competition at play. In other cases, the receptionist will offer a cheaper room than you could find online (often just the online price minus the agency’s commission).

What about the big American agencies?

Why don’t these same small hotels appear on the big American search engines, like Hotels.com, Expedia, and Travelocity? They’re simply too small. A fifteen-room two-star hotel in the Latin Quarter (Oh, how we love thee!) is often too small and too inexpensive to capture the attention of the big booking agencies, who prefer to “move” a massive number of rooms at chain hotels (often in less-than-ideal neighborhoods) or smaller four-star hotels (with higher profit margins).

For this reason, EuroCheapo works only with online booking agencies that offer extensive listings of 1, 2, and 3-star independent hotels.

Have a question about budget travel or planning your trip on the Web? Email us.

About the author

Tom Meyers

About the author: Tom Meyers created and launched EuroCheapo from his Berlin apartment in 2001. He returned to New York in 2002, set up office, and has led the EuroCheapo team from the Big Apple ever since. He travels to Europe several times a year to update EuroCheapo's hotel reviews. Tom is also a co-host of the New York City history podcast, The Bowery Boys. Email Tom. [Find Tom on Google Plus]

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One Response to “Travel Smarts: Why do hotel rates vary on the Web?”

Meredith Franco Meyers NYCgirl says:

Fantastic post! I don’t think many people know this…

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