Why All-Inclusive Vacation Packages Are a Trap

The peak travel season is bringing vacation packages into the limelight for travelers who are interested in added savings. If you’re still scrambling to get your vacation plans in order, you might have looked into bundled travel options for hotels, airfare and road transportation as an affordable method of travel.

The U.S. Travel Association states that airline tickets, overnight lodging and car rentals are the top three items that travel-goers seek out when planning for a trip. With the heightened accessibility of travel booking information via the internet, more Americans have turned to online travel websites like Expedia, Travelocity and CheapOair to help manage their vacation planning.

These packaged incentives undoubtedly have associated benefits. However, they may not always be the most practical option for some vacationers.

Vacation Packages by the Numbers

Aside from streamlining the travel planning process, cheap all inclusive vacation packages claim to help travelers save money, compared to booking each item à la carte. According to online travel websites like Expedia, vacationers can stand to save “up to $525” by selecting a vacation package for their next trip.

Bill Miller, senior executive of CheapOair, explained how suppliers and travel sellers benefit by giving travelers such steep discounts on vacation packages:

“A supplier is able to put a wholesale price on their product … this allows them lots of flexibility in their pricing, without worrying about their retail prices being compromised. The travel seller wins because they are able to mark up the supplier’s wholesale rate, so it gives them some pricing power and greater customer ownership … [travel sellers] don’t get that with retail rates.”

To determine if claims that vacation packages can save customers hundreds of dollars are actually valid, I did a bit of travel planning on Expedia.com for a Parisian trip for two.

When selecting the vacation package feature (hotel, airfare and car), for a round-trip vacation from Los Angeles to Paris, France, the most economic option available was $4,548 per person (taxes, fees and package discount included).

Upon booking these same accommodations individually through Expedia, the prices were as follows per person (tax and fees included):

• Hotel: $1,269.94
• Flight: $3,299.00
• Car: $427.03

As Miller confirmed, the numbers do add up in favor of vacation packages as booking these items individually led to a total cost of $4,995.97 — $447.97 more than the vacation package offered on the same site.

However, when booking à la carte directly from the supplier’s website, the price disparity isn’t as severe as when booking item by item. Upon making reservations on the actual hotel, airline and car rental websites, prices actually dipped a bit from the individual options on the Expedia.com website.

The hotel was $1,027.84, the flight cost from BritishAirways was $ 3,219.78 and the direct quote from the Avis website was $404.32. The total cost for all three accommodations ran $4651.94, which is not too far off (about $103.94 more) compared to Expedia’s vacation package price.

In fact, the advantages of mixing and matching individual items might even merit the extra $100 spent on a company-site à la carte option compared to a travel package.

Pros and Cons of Cheap All-Inclusive Vacation Packages

The travel industry has a lot of affordable deals for cruise vacation packages and cheap all-inclusive vacation packages that can entice consumers into jumping aboard without looking back.

In a 2012 Traveler Confidence Report conducted by Travelocity, about 70 percent of travelers said they intend to book vacation packages (flight and hotel) or book hotels via flash sales. But before spending thousands of dollars toward a neatly packaged vacation, make sure to investigate what these offers are really all about.

One of the best vacation tips to save money traveling is to be practical about where you’re willing to compromise. As with any discounted purchase, there might be limiting factors associated with all-inclusive vacation package deals that consumers should be aware of before booking, according to Miller:

• Vacation package prices will be limited to certain flights and properties.
• Prices are usually non-refundable — Miller says “it is wise to purchase trip insurance” in these situations.
• Some packages don’t allow for the accrual of frequent flyer points on the air portion of the trip.

Due to these restrictions, vacation bundles are not always recommended for the independent traveler who needs scheduling flexibility or specific lodging needs met. Miller also recommends that shoppers opt out of a vacation package “when the price of the same trip, with retail prices, is equal to or less than a vacation package price.”

Trips That Benefit From Vacation Packages

The value of vacation packages are most evident with leisure vacations to destinations like Spain, Hawaii and other travel hot spots, as opposed to selecting packaged travel for a domestic business trip. Cruise vacation packages are also a good route to take when planning a trip, as extra activities are often included in the price.

A few years ago, I took advantage of a cheap all-inclusive vacation package with a three-week European tour of 15 cities, across 9 countries. The bundle included round-trip airfare, hotel accommodations in every city, private bus transportation to and from each destination, preplanned group sightseeing activities, daily breakfast and eight group dinners throughout the trip — all for $5,000. In terms of scheduling, the packaged tour left little room for diverting from the itinerary, but I cannot deny that the vacation package rate was a steal.

If checking off all the biggest monuments and tourist highlights is a priority on your vacation, a travel package with included group activities could save you some extra cash. Typically, tourist areas like the Roman Colosseum charge an extra admission fee, but some all-inclusive travel offers might already cover these tickets in their bundles.

Running around on a strict schedule isn’t for everyone, though. If you peg yourself as an explorer, group activities might just be a hindrance to your plans.

Vacation packages and all-inclusive offers have financial benefits, but ultimately, personal preference will be the guiding influence for a successful booking on your next vacation.