Flight + Hotel package is really cheap than booking separate?

While planning a holiday, almost every website claims you save a lot if you book flight + Hotel. Even airlines now have holiday divisions, selling flight + stay. Should we go for this combo booking? Is it good all the time to book flight + hotel together? Do we really save? I am trying to explain in this post with example.
How flight+ hotel packages work?
It is important to understand how flight + hotel packages work. When flight + hotel combo deal is generated and sold at a discount, someone has to take the cut- most of the time it is hotels that bear the discount portion. Rationale here is airlines flying to a city are just a few but there’re 100s of hotels a customer can go to. By teaming up with airline/holiday makers, hotels get assured customer, who otherwise may go to a competition hotel. Thus discount portion is mostly borne by the hotel. It is possible airline also takes a cut in some cases, depending on how their agreement is with the holiday maker selling the package deal to customers or how empty/full their planes are.

Claimed savings is often on the list price.
The term “save big” not necessarily be exclusive. Hotels give discount to anyone who can get them business. Hotels with low occupancy often give discounts, which may be available on multiple platforms, including ones like booking.com, MMT/Yatra/Cleartrip or their own website. It is not really like you get big discount only with the air fare+ hotel package and everyone else pays big money. Of course the % of discount may vary depending on multiple factors, but don’t fall for advertised numbers without an independent cross check.

Cheaper hotels are never part of Airfare + hotel package.
The packages often include expensive 3 to 5 * hotels where room rents are high, margins are higher and they can afford to give some discount. If your travel style is to stay at budget hotels, you’re better off booking flight and hotel separate. Budget hotels and hostels operate with thin margins- they can’t afford to give deep discounts or a cut to travel package makers, hence are often excluded from package deals.

There’re factors other than hotel room rate.
Don’t go blindly by hotel room rate. There’re many other factors influence your overall trip expense. Consider this
  • For early morning flight, staying closer to airport may save lots of taxi money.
  • Hotel should be close to places you’ve to visit in the city- staying somewhere far for cheap and then spending a lot on taxi will cost you more overall
  • Hotel rooms are sold in a dozen different combinations- with/without breakfast, with/without internet, free cancellation/cancel for a fee/Non refundable and so on. It is important to understand what’s being offered to you and if it suits your needs
Less flexibility
  • Packages work fine if you’re spending all your time at one hotel. At times we may move between cities, may stay with friend/family and so on.
  • Airfare may have different sub types- like hand baggage only fare
  • There’s no assurance in the package that if your flight is delayed/cancelled and your ticket is modified to arrive one day late and return same day as earlier/one day late, that your hotel booking will be adjusted accordingly and you will get some refund (say if you’re arriving 1 day late and returning same day as earlier)
Let us consider some examples:
I checked a few samples and found that booking separately is the most economical way.
#
Trip Details
Airline
Hotel
Combo cost
Flight + Hotel Separate *1
Remarks
1
Chennai-Kochi 2 N/3 D
April 04-06
Spicejet
Harbour View Residency +
Lake Canopy
On Spice Holidays
Flight + 2 night hotel + cab
28607
6700+500 conv fee (flight)+ 2700 +
6375+ 3500 cab for 2 days=19775
Package costs 9k extra
2
Delhi Goa 3 nights, July 09-12
MMT
Hotel Abode
Go Air flight+ airport transfer, 1 activity
22k INR
7000 for hotel
7500 for flight + 500 conf fee + 2000 INR for airport taxi
= INR 17000
Package costs 5k extra
3






*1 Checked on Airline website and booking.com. For hotel booking you can try HotelsGuy app as well.

We need to understand that stitching flight, hotels, cabs etc and making a package incurs extra cost for the airline/holiday company in terms of manpower, infra etc
-Some sales folks are needed to build relationship with hotels, airlines and bring them onboard
-Some support staff are needed to deal with customer inquiries, complaints, requests
-Payment receiving, settlement among partners, processing refunds
-Marketing/Advertising/Website maintenance overheads

Thus it is not really possible to offer a holiday super cheap.

Watch out: Per person rate- multiplied
Often holiday makers quote a per person rate and double it for two pax. But hotel rooms cost the same (almost) for single or double occupancy, cab expense doesn't vary if it is one person or 4. So need to be careful how the computation is done. Only flight component is per person. Negotiate where necessary.

Combined packages will be cheaper only in very select cases
- Like it is a peak season and holiday makers have blocked a set of rooms in popular hotels for their prospective guests- so rooms are not available on hotel website or other platforms for the dates you need. Example year end in Goa. Otherwise during regular time probability of a city running out of hotel rooms is very low. If you have some flexibility, you can always find a better option.

Tips for booking Flight + Hotel packages
1 Don’t go by what’s advertised. Check flight and hotel cost separately on multiple sites to check if there’s any real savings
2 Check what’s included and what’s the cancellation policy
3 Check for impact of specific scenarios- would a 3rd person using extra bed will be charged full fare or only extra bed supplement, restrictions like minimum 2 people should be there and so on

I would have been happy to pay a bit extra for package deal, if someone is ready to own the risk of disruptions- like either airline or hotel or holiday service provider. But that is not the case- each of them have their own terms and conditions, cancellation charges to protect their interests. If flight is delayed or cancelled, holiday maker won't take any responsibility to provide alternate flight at no extra cost. Hotels won't reschedule for free if we're arriving a day later or earlier. So if I have to own the entire risk, I might as well go for cheaper option and book them separately.

What are your thoughts? Do you go for all inclusive package for convenience or prefer to draft your own itinerary?

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