There are many people who do not have a full understanding of how websites can offer cheap hotel rates online, especially when they are offering them at a lower price than the hotel. How is it that these websites really work, and is their rate really cheaper than the hotel?

I can tell you, because I own one of the sites, that the cheap hotel rates you find on these sites are real. There are several factors that go into why the sites are able to sell the hotel at a cheaper rate than the hotel itself.

First of all the sites offering cheap hotel rates buy in bulk. We guarantee a hotel that we will fill a certain number of rooms each night of the year. This takes some heavy forecasting. We look at when events are in the area, when people are traveling to the area and then increase our quantity.

We have contracts with the hotel that require them to reserve our rooms. In return since we guarantee we will fill their rooms, they offer us a discounted rate. This is the wholesale rate, which is even less that the cheap hotel rates displayed on our site.

We then add a markup to the rates, so that we make money, and sell it to you less than you could get it from the hotel. Since we pay up front for the rooms, these cheap hotel rates are only available to you if you are willing to do the same. This is simply because we have prepurchased the rooms at the wholesale rate up front from the hotel.

There really isn’t a catch to these type of websites. You do have to prepay, but more and more hotels are charging a deposit to guarantee the room anyway. You can save a lot of cash if you buy in advance with websites like mine. Plus almost any site offering cheap hotel rates will match a competitors price if you find it cheaper. This is because each of these sites is working towards a market share, and loyal customer base.