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In pursuit of the least pricey package deals

Published Sep. 2, 2005

Reprinted with permission of online travel publisher

In addition to offering traditional air travel, most major U.S. airlines have increasingly begun to focus on combining flights with hotel stays and other perks to create bundled air-and-hotel vacation packages. But are they always the best deal?

When we compared vacation rates from the "Big Six" U.S. airlines (American, Continental, Delta, Northwest, United and US Airways) with those of the "Big Three" online travel agencies (Expedia, Orbitz and Travelocity), the results were dramatic: In most cases, the online agencies consistently outperformed the airlines in head-to-head price competition.

To provide a fair basis for evaluation, we compared prices to different destinations (Jamaica, Hawaii and the Netherlands) and tracked departures in several different travel periods to avoid skewing the prices with advance-purchase requirements.

We also selected sample rates for Monday, Wednesday and Friday departures from the same gateway cities. Our sample vacations consisted of three-, five- and seven-night packages with comparable accommodations.

Finally, we factored all taxes and fees for air travel into the prices.

Our research revealed that, by and large, Expedia, Orbitz and Travelocity each offer consistently lower prices than the airlines for comparable packages.

For example, for travel to Montego Bay, Jamaica, the three agencies' average low price for a three-night, air-and-hotel vacation was $453 per person. For the same vacation, using the same departure date, the four airlines that had availability had an average price of $877, $424 higher than the online agencies' average.

The same trend held true in the Hawaiian vacation test.

The sample starting rates for five-night packages from Los Angeles to Kauai were as low as $598 from Travelocity; the average online agency price was $626. The airlines, despite United's modest $647 price tag, had an overall average of $1,168, or $542 higher than the agency average.

Expedia had the best rates to Amsterdam and Jamaica, and it was close to the best price for Hawaii vacation packages. According to Teri Franklin, a product manager for Expedia, the agency's 11,000 Expedia Special Rate hotel properties worldwide greatly contribute to the low prices. Expedia negotiates directly with those hotels and can pass any savings on to travelers.

The value improves when the hotel rate is combined with air fare into a vacation package. Franklin says that packages tend to be less expensive than air fare and accommodations purchased separately because hotels can sell their rooms to a travel agency at lower prices than they feel comfortable publishing in advertising.

As noted above, the other two online booking agencies also had generally low prices, though Travelocity tended to have a smaller hotel selection in many searches.

Orbitz, which is owned jointly by five of the six major airlines (US Airways is not a partner), is a sort of "hybrid," and its mixed-bag prices reflect that. Because the agency sells for the largest airlines, it can offer the best prices among those and has access to many hotel suppliers as well.

On the downside, however, Orbitz would not provide an online price quote for Amsterdam packages (it required phone reservations), whereas Expedia and Travelocity allowed online booking in all cases.

The price disparity between the airlines and the agencies may be due to the fact that the airlines are limited to offering their own flights, or those of a codeshare partner, while an agency such as Travelocity can offer flights on hundreds of carriers.

Clearly, it is crucial to comparison-shop when searching for your next vacation.