Understanding Expedia's Markup and Its Impact on Total Price

When using Expedia for hotel bookings, customers often wonder about the markup and how it affects the total price they pay. Expedia's merchant model typically involves a markup, which is a percentage of the total price paid by the consumer. This model allows Expedia to buy hotel inventory at a wholesale rate and sell it at a higher price to consumers. However, the exact percentage can vary based on several factors, including the hotel, specific agreements, and market conditions.

The Merchant Model and Markup

In Expedia's merchant model, the markup is usually a percentage of the total price the customer pays. This percentage can vary, and it's important for consumers to understand how it is calculated to avoid unexpected costs. For example, when booking a room through Expedia, the markup is added to the base price of the hotel room, which may already include taxes and fees. The final price a customer pays is the sum of the base price, the markup, and any additional fees or service charges.

Case Study: Bangkok Booking Experience

One of our readers had a specific experience with Expedia in Bangkok in 2017. When booking through Expedia, they were not informed about the amount and percentage of the service charges. Upon check-in, the hotel bill included a charge of 17% on room charges for a 5-night stay. This additional charge was mentioned on the hotel's receipt but was not disclosed by Expedia at the time of booking. When questioned about this charge, the front office manager advised to book directly with the hotel for a discount and provided her business card.

This incident highlights the importance of being aware of all potential costs when booking through a third-party platform like Expedia. While the website may not always disclose all fees, it is crucial for customers to understand the total price they will pay. If you are concerned about unexpected charges, it's always a good idea to book directly with the hotel to save money.

Expedia's Revenue Model

Expedia generates revenue through the markup between the wholesale price it pays for hotel inventory and the retail price it charges to consumers. This margin can vary based on several factors, including:

The specific hotel and its negotiation agreements with Expedia The current market conditions and demand for hotel rooms The overall performance of the hotel chain The overall market trends and consumer behavior

While the exact percentage may not be disclosed, it is generally understood that Expedia can generate significant revenue through this model. However, some travelers have reported varying charges and fees, which can sometimes be alarming or unexpected.

Conclusion

In conclusion, when booking hotels through Expedia, it's important to be aware of the markup and how it is calculated. While the markup is a percentage of the total price, it's crucial to understand all the costs involved. If you encounter unexpected charges or feel that the markup is too high, it might be worth booking directly with the hotel to save money.

For more detailed information on Expedia's pricing models and to ensure a smooth booking experience, it's recommended to:

Understand the terms and conditions of the booking Read the hotel's policies and cancellation fees Verify all charges and fees before making a payment Book directly with the hotel when possible for lower costs

By taking these steps, you can minimize the risk of unexpected costs and enjoy a more seamless travel experience.