The last time I booked a room with a seemingly ridiculous discount rate from Expedia, I think it was around 85%, I asked the hotel manager how the hotel manages to operate with so low income. Expedia is likely to have different agreements with different hotels, but in this case the hotel was actually paid the normal price and Expedia was obviously trying to minimise their own loss.
In this particular situation, Expedia managed a fixed number of rooms through their booking system and not only did they charge a commission for all successful bookings, but they also guaranteed a certain occupancy rate. If fewer rooms were sold, Expedia would still pay the hotel the full price (minus commission) for the vacant rooms. If all indicators seem to show that noone will book such a room, it may make sense to offer the room with a very high discount.
If Expedia is e.g. paying the hotel 80€ in any case for a 100€ full price room and they have to offer it for 10€ to get it sold, gheythey have at least minimised their anticipated loss by 10€.