There's an important distinction between the two major types of online vacation providers, and understanding this difference can help you find the best deal on your next trip.
One type of provider sells air-and-hotel packages with prices that are fixed for a certain period of time. These companies have purchased a large supply of airfares and hotel rooms ahead of time at a discount, and sell them at a slight markup to make a profit. The other variety of providers has a "dynamic pricing" model, reflecting the fact that their rates for airfare and accommodations are constantly changing, depending on supply and demand. For example, booking a vacation with Expedia allows you to search the company's huge database of airfares and hotel rates. The price you are quoted is generated at that moment, based on the inventory available to Expedia at the time of your search.
So how do you know where to look for the best deal? Some of the bigger dynamic pricers have a huge inventory to draw on, so you may find lower prices with them. However, the pre-packagers can sometimes have bargains, too, so it's wise to shop around before booking. Another option, if you'll be traveling soon, is to try a provider that specializes in last-minute travel. Read SmarterTravel.com's tips for planning your last-minute vacation to learn more.