Lower the Cost of an Expensive Airline Ticket by Buying a Travel Package (2021)
3rd party travel sites heavily promote “package deals” that combine an airplane ticket and hotel stay in a single reservation.
Packages can be more flexible than you may think because you usually don’t need to book the included hotel stay for the entire length of the trip. If you include a hotel room for even a single night, you can typically take advantage of package pricing. However, not every website or travel company allows you to do this.
Packages seem enticing, but are you better off buying a package or buying your airplane tickets and hotel room separately?
Packages don’t usually save much money
- For as much as travel sites tout the advantages of travel packages, they don’t usually save much money, and often cost more, than buying each component individually. When you book separately, you can often find discounted rates for your hotel (and rental car) reservation. The potential savings are often larger than the discount built into the travel package. Or you can use points to get part of your trip for free.
- When you book a travel package, you usually won’t get to take advantage of the hotel’s loyalty program. Because the package is usually a 3rd party reservation, you won’t earn hotel reward points and might not get any loyalty program benefits.
- Packages are often non-refundable. You won’t be able to freely cancel the hotel portion of your itinerary or simply pay the airline’s standard cancellation and change fees for the airfare portion. Some travel websites will let you adjust the details of your travel package reservation, rather than cancelling it. But it is almost always more expensive, and more hassle, than just dealing directly with the airline and hotel.
But sometimes you can save a bundle
Packages can sometimes save you significant amounts of money. The mostly scenarios are:
- For premium cabin airline tickets. Packages almost always let you save money on business and first-class airplane tickets. You can often add a hotel stay for a single night, or even a car rental for a single day, and significantly drop the cost of premium cabin airplane tickets. In other words, it is cheaper to buy a premium cabin airplane ticket plus a hotel room, than it is to buy the premium class ticket alone.
- For expensive last-minute flights. Another circumstance where travel packages can save you a significant amount of money is when you need to buy expensive tickets within a few weeks of departure.
- For expensive hotels. Packages can often save money on expensive hotel rooms, where there is a significant hotel commission for travel agents to play with.
- For resort hotels, particularly beach resorts. For certain types of trips, a high percentage of hotel rooms are sold through travel packages. Many of these packages are sold through specialists like Pleasant Holidays, Apple Vacations, or Costco Travel, rather than through traditional travel website like Expedia. These companies also represent a large percentage of the tourist traffic going to destinations like Cancun and Jamaica. Because their packages aren’t as flexible, they are able to negotiate good deals with resorts and airlines, which can result in lower prices for you.
Airlines want to maintain high retail prices for premium cabin ticket, in order to capture as much money as possible from people who are travelling on expense accounts. At the same time, they would like to sell as many premium cabin seats as they can. So, they are often willing to sell business and first-class tickets as part of hotel packages at much lower prices. It helps them sell seats, without having to lower the prices for people who would pay high prices anyway.
This approach can save substantial amounts of money. For example, for a summer trip from New York City to Rome, the best prices for nonstop business class seats were $3,869 per person. But when combined with a 3-night hotel stay, the cost for the airfare (on Alitalia) dropped to around $1,900 per person (varying a bit based on the chosen hotel). Flights on other airlines saw lower discounts. For example, the nonstop flights on American dropped to about $2,400. But that was still significantly cheaper than the regular $3,869 price. Even if you can find much better hotel rates elsewhere, you could simply add a single night at the cheapest listed hotel to get this huge discount on your tickets (and you don't even need bother to stay there).
For some additional examples, look at class-fare-sale/ Frequent Miler’s post on the topic.
Airlines tend to dramatically increase their ticket prices starting about three weeks before the departure date. The assumption is that most of the people who are making last minute plans are travelling for business or for other critical reasons and are not very price sensitive. For many packages, the airfare rates are pre-negotiated and don’t rise when the retail rates do. So as airfare prices start rising, packages become more and more attractive.
Most hotels have agreements that fix the prices that third-parties can charge for hotel rooms. That’s why you’ll often see “Best Rate Guarantees” on different booking sites. But package pricing doesn’t fall under those arrangements. After all, the customer never sees the actual price for just the hotel room portion of the package. That lets the travel company discount the price without violating their pricing agreement. In an effort to try to increase their volume, they essentially give you a portion of their often generous hotel commission.
blog comments powered by Disqus