Expedia benefits from volume-based discounts, which means that the more rooms they book with a particular hotel, the lower the rates they can negotiate. This allows them to offer customers lower prices than if they were booking directly with the hotel.

Expedia and other Online Travel Agencies (OTAs) are often cheaper than booking direct because they operate on a high-volume "wholesale" model. They negotiate "bulk rates" or "merchant rates" with hotels and airlines, essentially buying rooms or seats in advance at a discount that isn't available to the general public. Additionally, Expedia excels at bundling—by combining a flight, hotel, and car rental into one package, they can hide the individual prices of each component, allowing them to offer a total price that is lower than the sum of its parts. OTAs also use aggressive "loss leader" marketing, sometimes taking a smaller commission or even a slight loss on a specific booking just to gain a loyal customer for their rewards program. However, the downside is that booking through Expedia often means you won't earn hotel loyalty points, and you may face much more difficult customer service hurdles if you need to cancel or change your flight compared to booking directly.