Online travel agency vs. booking direct: Your guide to the best way to book your next hotel

Jun 28, 2020

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The coronavirus pandemic upended the travel industry around the world. For would-be travelers, that meant thousands of cancellations — and the ensuing scramble to secure a refund.

A pattern emerged as we heard from countless TPG readers who struggled with their reservations. Travelers who booked via an online travel agency (OTA) were having the most difficulty in receiving a refund.

Although common wisdom would then say to book directly through the service provider and avoid the OTA, that’s not always the best course of action when it comes to hotels. Let’s see what factors need to align before booking through an OTA for your next hotel stay.

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In This Post

There’s a notable price difference

The first factor to take into consideration is the price. If an OTA isn’t less expensive than the direct hotel option, I wouldn’t even bother.

Hotels typically have price parity agreements with OTAs, meaning that the lowest published price on a hotel’s website should, in theory, be the lowest price that you see anywhere else online. However, in my experience, this isn’t always the case. And OTAs can still offer their own promotions, like reward nights or Priceline’s frequent Express Deals coupon offers.

The Chablé Yucatán in Mérida, Mexico (Photo by Chris Dong / The Points Guy)
The Chablé Yucatán Hotel in Mérida, Mexico (Photo by Chris Dong / The Points Guy)

If I’m booking a hotel, I also always search through an OTA to get a rough sense of what nightly pricing looks like at that destination. If you land on a property that you’re really interested in, always compare pricing between the OTA and the pricing that’s directly on the hotel website or app. This even holds true if you plan to use hotel points — to see if it’s worth redeeming them.

Nevertheless, if you come across a lower price on an OTA, that also doesn’t mean you should immediately jump on it. Some hotel chains offer a price-match guarantee and you should be on the lookout for hotel sales, senior discounts, AAA members-only deals, etc.

Related: 5 reasons why I went all in on this hotel credit card

You’re booking (and staying) last minute

The next factor is related to timing — specifically how far in advance your stay will be. One of the most frustrating aspects of OTAs is that they’re a middleman. There is an extra layer of complexity when you have to deal with a third party, particularly when it comes to changes or cancellations. However, the concern about a cancellation can (almost) be thrown out the window if you’re booking a hotel at the very last minute.

(Photo by Atstock Productions / Shutterstock)
(Photo by Atstock Productions / Shutterstock)

In normal, non-pandemic times, I might even go so far as saying that if you are confident in your selected hotel and travel dates — and you take into consideration all of the factors on this list — it could be enough to consider the OTA option since sites like Expedia and often have access to special pricing last minute. Naturally, coronavirus has changed this assumption since reopening plans can be rolled back at a moment’s notice, hotels or OTAs could close for good, or some other unforeseen circumstance related to the pandemic could foil your reservation.

If you’re booking on a moment’s notice, the odds of that happening decreases. However, keep in mind this is just mitigating risk, not completely eliminating it.

Hotel loyalty perks don’t add value

If you are one of the many travelers that don’t hold hotel elite status, this is an entirely moot point for you.

However, for everyone else, if you want to make use of your hotel loyalty benefits, book direct and not through an OTA. That includes perks when at the property, such as free breakfast or late checkout, as well as loyalty earnings, such as elite night credit or points.

Breakfast at the Hyatt Andaz Capital Gate Abu Dhabi (Photo by Katie Genter/The Points Guy)
Breakfast at the Hyatt Andaz Capital Gate Abu Dhabi (Photo by Katie Genter/The Points Guy)

Related: Best credit cards for hotel elite status

I have Hilton Diamond status by virtue of holding the Hilton Honors American Express Aspire Card. Despite this perk, I have come across instances when saving cash by making a last-minute booking through an OTA outweighs what I value my elite benefits to be. This is obviously a personal decision when it comes down to it. Is the chance of receiving a room upgrade or continental breakfast worth the cost savings? What about that late checkout benefit or hotel lounge access?

If the price is right, I typically won’t hesitate to skip out on elite benefits for shorter stays, if I happen to be traveling alone, or the property already offers free breakfast.

You want to use credit card points

At a time when finances might be tighter than usual, you might want to maximize the points that you already have as a cash substitute. Besides the more complicated process of transferring points to hotel partners, some credit card points can also be used on their respective travel portals. Credit card travel portals are typically powered by OTAs, such as Chase Ultimate Rewards Travel which uses Expedia.

This is a particularly useful strategy if you’re looking at hotels that aren’t part of a major chain.

Photo courtesy of Chase
Photo courtesy of Chase

You can minimize out-of-pocket expenses by using credit card points at a fixed value. Using Chase as an example, Chase Sapphire Preferred Card and Ink Business Preferred Credit Cards offer 1.25 cents per point when redeeming hotels through the portal, while the Chase Sapphire Reserve offers 1.5 cents per point.

Even if this is below the TPG valuation of 2 cents per Ultimate Rewards point (thanks to the value of transfer partners), sometimes it’s preferable to just not spend the extra cash.

Bottom line 

The pandemic’s effects will be felt by the travel industry for many years to come. And it has only made us further scrutinize OTAs and the risk involved when booking through them.

However, if the price knocks it out of the park, you’re reserving within a couple of weeks of travel and can’t get enough value out of loyalty perks, then OTA hotel bookings can still make plenty of sense. Combined together, these are a lot of qualifiers, but I’ve managed to take advantage of many OTA reservations using these exact criteria. At the end of the day, be sure to know all of the uncertainties involved to make an informed booking decision.

Featured photo by Samantha Rosen / The Points Guy

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Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.