ThereÂ?s an important distinction between the two major types of online vacation providers, and understanding this difference will 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.
We compared providers that offer pre-packaged vacations with those whose prices and packages are dynamically generated to see which offer the best value for travelers. Our comparison focused on four of the most popular European destinations: Amsterdam, London, Paris, and Rome. We chose sample prices from leading pre-packaged vacation providers Go-today.com, OctopusTravel.com, and OffPeakTraveler.com. For dynamic pricing providers, we tested the “Big Three” of online agencies: Expedia, Orbitz, and Travelocity.
To make sure our test was comprehensive and balanced, we compared sample prices for departures during the high (mid-July) and shoulder (mid-September) seasons. Each package includes round-trip airfare from New York (usually the lowest-priced U.S. departure city) and six nightsÂ? accommodations. The sample rates are per person, based on double occupancy, and include all taxes and fees associated with airfare.
|Dynamic price average||$1,212||$950||$963||$1,254|
The edge here goes to the pre-packagers. For travel in mid-July, when throngs of tourists line the streets of the EuropeÂ?s great cities, Go-today had the best average price at $865, and two of the four best rates ($819 to London and $963 to Rome). In fact, the three pre-packagers had some of lowest rates overall, just slightly higher than ExpediaÂ?s average of $959. Travelocity and Orbitz were quite far behind, averaging $1,094 and $1,232, respectively.
|Dynamic price average||$1,035||$751||$788||$1,144|
In this case, the results were similar, with pre-packagers offering more attractive prices overall. However, Expedia was the clear individual champion of low prices, an average of $435 cheaper than Orbitz and $211 less than Travelocity. As for the pre-packagers, OffPeakTraveler.com came in with the super-low rate of $598 for travel to London, and OctopusTravel.com featured a $787 package to Amsterdam. These two providers were about $80 higher on average than Expedia, and slightly better overall than Go-today.com.
What does it all mean?
For both high- and shoulder-season travel, we found the pre-packagers to have better prices on average, with the most significant gap for July departures. For September, the pre-packaged and dynamic price averages were much closer, as Expedia’s excellent rates offset rates from Orbitz and Travelocity, whose prices were higher than the competition for almost all of our sample bookings.
Our survey results showed the best prices primarily from Go-today.com and Expedia, but it’s still advisable to shop around, as some providers may offer better, or more flexible, accommodation options for only slightly higher prices. Also, while you might find superior rates in a pre-packaged deal, remember that you can choose among many more hotels and travel dates with the major online agencies. In addition, we observed that the dynamic pricing sites often allow you to make your travel plans much earlier, since they aren’t required to purchase their inventory ahead of time. This may allow you to take advantage of early booking discounts and greater availability.