I noticed that Agoda.com often offers significant cheaper prices than booking.com when comparing prices (looking at the same hotel, same room type, same dates...).

I wonder why that is considering both are part of the same company (“Booking Holdings”).

Just to clarify, I’m comparing the total prices with tax and other costs included.

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    booking.com default view shows prices per stay, agoda.com shows prices per night. – Dmitry Grigoryev May 16 '19 at 11:18
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    By default, Agoda is showing fake promo prices (they call them "base price"). They have an option in the currency menu to show a "full price" instead. Booking.com normally (but not always!) shows the full price. – dbkk May 16 '19 at 12:52
  • Booking.com regularly shows cheaper prices for me than Agoda. Still same hotel, same room type and same day – phuclv May 18 '19 at 9:17
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    This is not generally true, it depends hugely on the country and Agoda's coverage. I can confirm it's often true for SE Asia but not for Europe. – smci Sep 9 '19 at 3:16
  • I’m not saying this is generally true, but it has been the case for many countries I’ve visited in Asia. It’s also disappointing to see many comments missing the point. I obviously compare the total and complete end prices... – user1073075 Dec 11 '19 at 5:40

Booking.com uses the Agency model, this means the website is a place where hotels list their offers and booking.com gets a commission with every booking done through their website.

On the other hand, Agoda uses the Merchant model in addition to the Agency model, meaning that in some cases they actually buy the hotel rooms from the hotels directly (in bulk), then offer them at a competitive price. I think they do that a lot with Asian Hotels.

That's why sometimes Agoda is cheaper, other than that it's just a psychological effect because they show prices per night and tax-exclusive, which gives the impression that their prices are less.

One more thing, Booking Holdings (the company that owns both Booking.com and Agoda) is doing a great job, they are doing a business trick where people think that both sites are major players which are competing with each other, so customers think they must choose between one of them, whatever customers choose the company earns money. This is called "self-competition" in the business world. It's also called "The Illusion of Choice" (thanks to @RyanfaeScotland for pointing that out).

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    very interesting, thanks for pointing out the "competitive" connection between the companies! – JakeDot May 16 '19 at 10:38
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    I wouldn't call it a psychological effect if they quote prices before tax when their competitor does not, though – JollyJoker May 16 '19 at 12:47
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    By default Agoda doesn't just show "tax exclusive" prices, but a "base price" lowered by an arbitrary amount (basically, fake). When you try to book, they add various fees. To their credit, they do have the option to show the "full price" -- no idea why anyone would want anything else. – dbkk May 16 '19 at 12:55
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    Although it is definitely self-competition, the effect you are describing sounds more like "The Illusion of Choice" to me: visualcapitalist.com/illusion-of-choice-consumer-brands and might be worth adding to your answer. – RyanfaeScotland May 16 '19 at 12:56
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    @dbkk when you are sites like google.maps.com and searching for hotels... there isn't a way to choose "full price" or "real price" ... instead you get one price... and often the price displayed is the "fake price" aka the "price without any of the required fees/taxes". – Trevor Boyd Smith May 16 '19 at 14:10

I run an Australian whitelabel booking site (Beat That Flight) that's mainly for flights, but also has hotels.

What's interesting when I look around at other sites is how much it varies.

While others have mentioned the illusion of choice with self-competing and merchant/agency, it's also worth noting that for many sites, we have different data sources for prices (I use a Russian data source!) and between us and the airline or hotel, there may be several layers of companies. These each might have their own promotions, group discounts, bulk purchase, loss leaders or commission rates that affect the final price shown to the consumer.

Similarly for hotels. However personally, I always try to check the hotel site directly - you often get a better deal if booking directly, and are more likely to be upgraded / have breakfast included / some other benefit in my experience when doing so.

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    +1 for the last point. Anytime I book with Booking and end up needing one more night (which I usually pay directly at the hotel) I always find much better prices. Obviously, you avoid one intermediator, but it's important to notice. – Mario Garcia May 17 '19 at 7:15
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    I have made experiences both ways. In some situations going through such an agency is actually cheaper than directly booking with the hotel. It does not really make sense as there are more people taking their share, but perhaps it is some bulk deal or so. – Martin Ueding May 18 '19 at 7:38

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