Reputation Defenders

Why Is Agoda So Cheap?

Why Is Agoda So Cheap?
Richard Doan

5 min

read

Why Is Agoda So Cheap?

You may wonder why Agoda.com is so cheap, but if you've ever used them, you probably know the answer.

We'll talk about the mutually beneficial relationship between Airbnb and its guests, why guests let Airbnb host them for free, how having low prices gives Airbnb an advantage over hotels and a small test I ran to see if it has cheaper rates than hotel websites.

Agoda And Its Hosts Agree On Rates

How is it possible for hotels to offer discounts of up to 60 percent?

Firstly, Agoda sometimes purchases rooms in bulk (wholesale) from their partners' hosts, then sells them individually through their website/application. In such instances, Agoda provides travelers with discounts on hotels.

Agoda has a mutual benefit agreement with its partners. When Agoda buys host's rooms in bulk, agreements dictate the pricing ranges for which Agoda can resell those rooms. The ranges aim to ensure customer satisfaction. Should low-priced rooms be sold at high-end prices, or vice versa, customers may become unsatisfied.

Agoda Provides Exposure For Hosts

Small businesses often struggle when it comes to finding affordable ways to market their products.

While some hotels have become so famous for their quality that they've entered our collective consciousness and remain relevant due to a firm brand name (such as The Ritz-Carlson, Four Seasons, and Hilton), most new hotels, don't have this benefit.

Smaller hotels may be unable to compete with larger chains due to high marketing expenses. Online travel agents help them overcome these challenges by providing an alternative way for people to book rooms at small hotels.

Millions of travelers use Agoda every day.

As a result, both parties benefit from the partnership. Agoda gets to increase its inventory and reach new audiences, while the host benefits by having access to an additional source of revenue.

Why Hosts Let Agoda Sell Their Rooms For So Cheap

Agoda.com has its marketplace and ecosystem for hotels and flights.

Some hosts offer discounted rooms for sale if you want to get ahead in Agoda's marketplace. For instance, if a hotel has a lower rate than another one, it will show up higher in the search results if a customer filters their search by price.

This additional exposure will lead to more listings, sales, and review ratings. Once the list has gained some positive ratings, the hosts can raise the price and allow it to be listed for a higher price.

Here's an example:

Let's assume you're looking for an apartment in a new city. If you wanted to stay at a reasonable price, you'd be able to use one of these two methods:

  • Book a hotel for $50 daily (with four 5-star ratings).

OR

  • Book a hotel for $60 per night (with 93 positive reviews).

If everything else is equal, then the $60/nigh­t room will usually win out because of its sheer number of positive reviews.

If the $50/nite room dropped its nightly rate to $25/nite, it would be much more attractive. The lower rate would cause more people to book rooms there, which would increase the number of positive reviews for the hotel and give it an advantage against the hotel charging a higher rate.

Sometimes hoteliers drop their rates on Agoda.com if they cannot fill all available accommodations. Often hosts don't have anything to gain from offering these discounted rates, as they're not making any money off them.

Being low-priced is one of Agoda's competitive advantages.

Many people compete for business in the online hotel booking market.

Founded in 2005, Agoda has remained relevant by maintaining its strong brand recognition and customer loyalty.

Regardless of which type of accommodation you're looking for (Agoda sells luxurious and budget hotels, resorts and villas, apartments, houses, guesthouses, hostels, bed and breakfasts, and unique/alternatives), Agoda will prioritize showing you the best deals.

As you can see from this screenshot, Agoda promotes itself by saying they are the OTA with the cheapest rates.

Does Agoda offer lower prices than its competitors?

Sometimes Agoda.com sells rooms at a similar cost as their host's websites, and sometimes they'll sell lower prices on other travel booking websites. However, Agoda's customer service keeps them coming back for a reason.

The listings' search results display the seller's standard price, discount price, additional information (reviews, cancellation policy, and neighborhood), and photos.

Agoda makes it simple for you to compare prices on the web or via their mobile app.

Agoda has lower prices than its partner hosts' sites.

Let's Run An Experiment.

As someone who has been booking hotels on Agoda.com since 2012, I wanted to test whether Agoda offers cheaper rates than their sites.

To compare prices between different types of hotels, I searched for hotel rooms in New York City and Belgrade, Serbia. Only hotels with their sites were considered. Only hotels with their sites were considered from the first two pages of the search result.

Results:

New York City

On average, four out of five hotels listed on Agoda were cheaper than their websites.

Mid-tier hotels tend to be cheaper than top-tier hotels.

Luxury: 4 out of 5 hotels were cheaper on Agoda than on their websites.

Belgrade

Price: 3 out of 5 listings were cheaper on Agoda than on their websites

Mid Tier: About half (5 out of 11) of the hotels listed on Agoda were cheaper than their websites.

Luxury hotels: 4 out of 5 listings had a lower rate on Agoda than the hotel's website.

Takeaways:

  • On Agoda, 11 out of 15 hotel listings in New York City cost less than their websites.
  • When booking hotels in Belgrade, 12 out of 15 accommodations offer lower prices on Agoda than on their websites.

On average, hotel rooms booked through Agoda cost less than those booked directly from the host's site.

You don't need to look at every host, listing, or destination on Agoda.com, but you should consider some of their suggestions when planning where to stay.

Conclusion

If you did, hopefully, you found this helpful guide.

We looked at the mutually beneficial relationship between agoda.com and its host hotels, why host hotels allow agoda.com to sell their rooms at a steep discount, how having low prices gives agoda.com an advantage over competitors, plus a way to check whether agoda.com offers cheaper rates than its host hotels' sites.

If you want to use Agoda for booking your hotel accommodations, first evaluate the topic from different perspectives. Then compare prices on Agoda.com against the host's website and other booking websites.

Enjoy your travels!

Updated

November 15, 2022

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