Some of my colleagues based on the West Coast have recently been commenting on how expensive hotels have become. Sure, they’ve become pricier for everyone, but now, they were saying, it’s getting ridiculous.
At first, I just chalked it up to the post-COVID tourism boom. But then articles started to pop up accusing popular hotel booking sites of a predatory technique called price discrimination.
Residents of the notoriously affluent city San Francisco were being charged higher rates for hotels online than those based in other places. A study by researchers at Northeastern University found that users of some sites were unwittingly placed into pricing buckets based on their stored cookies and steered towards more expensive hotels. The list goes on.
So, what does all of this mean and can you use it to your advantage to actually save money on your next hotel? I tested this out on the most popular booking sites and found that a VPN might be just the solution you need to find the best price no matter where you are.
What is price discrimination?
Price discrimination is based on the idea that some consumers are willing and able to pay more for goods or services than others—especially when they’re unaware of the differences. Think of the stereotypical used car salesman who sizes you up and then highballs you because they think you’ll be able to pay extra.
The same thing is happening across nearly every segment of online shopping, but it’s particularly egregious on travel sites. Airfares and hotels are notorious for this practice and you might have already seen shades of it yourself—flight tickets and hotel room rates often fluctuate with each refresh of the website.
While the exact mechanisms behind how companies track user metrics and set these discriminatory prices are trade secrets, the fact that they’re doing this has been an open secret for some time. It’s believed, however, that one of the main ways that companies track you is using locational data based on your IP address.
Thankfully, by using a VPN you can hide your true location and trick these sites into thinking you’re from a different area. With a little cunning and some elbow grease you can use these companies’ own underhanded tactics to your advantage to find cheaper rates.
Further reading: Is it time to switch VPN providers? 5 reasons to consider a change
How I tested
To test if price discrimination is happening with online hotel booking, I conducted an experiment. I visited and compared prices across six of the most popular online booking sites: Booking.com, Kayak, Trivago, Expedia, Hotels.com, and Priceline. I searched for hotels in New York City for the night of Friday, March 21 through Saturday, March 22—approximately one month from the day I was searching.
I would connect to a VPN server located within the U.S. and then visit each site using Chrome’s Incognito Mode—so no cookies or browser cache was stored between visits. I conducted the experiment on the same day using VPN locations all across the U.S. including San Francisco, Salt Lake City, Phoenix, New Jersey, Miami, and Chicago.
The price experiment I conducted was designed to gauge to what extent your IP’s location (ie. the area you’re booking from) affects the prices of hotels. Blocking the collection of cookies, browser cache, and history allowed me to rule out other potential factors that may have altered pricing results.
What I learned about online hotel prices
My results showed both good news and bad news. The good news was that overall, prices for most hotels stayed the same across VPN server locations. There were minor differences of a few dollars that I noticed, such as Trump International New York going for a rate of $836 from a Phoenix server and $839 from a San Francisco server, but mostly the differences were negligible.
The bad news is that some hotels across some sites change a lot. The most egregious case I found was a hotel called The New Yorker. The prices for this hotel fluctuated on all sites, but on Trivago the discrepancy was the largest.
Searching for the same hotel while connected to different VPN servers resulted in wildly different prices.
Sam Singleton
While connected to a VPN server in Phoenix the price for the hotel was $206, from a server in New Jersey it was $269, and from a server in San Francisco it was a staggering $352. That’s a difference of $146 per night, or an outrageous markup of roughly 71 percent for San Franciscans. It’s worth noting, however, that the price seemed to remain the same if you took the extra step of becoming a Trivago member, something I didn’t do for the purposes of this experiment.
I found a similar result with the Hyatt Grand Central hotel, which was offered for $199 per night from a server in Phoenix or $278 per night from a server in San Francisco—a 40 percent markup. This may have been even more indicative of price discrimination as there was no special discount for Trivago members.
While other price discrepancies I found were less severe, they were still seen across all sites, not just Trivago.
So, what’s happening here? The answer to that is complex. Some of these price differences might be solely attributed to the location from which you’re searching. Others may be due to special promotional rates that are only offered to certain areas or mobile providers—this may have been what was happening with The New Yorker hotel and the special Trivago member rate. Still other factors such as the time of day you’re searching or hotel room availability fluctuations can have an effect.
While I tried to limit these factors by using the same VPN service and searching on the same day at the same time and then rechecking results if I found a discrepancy, these other determinants can’t be ruled out.
Still, my results seem to show that the biggest determining factor for the price of hotels is the location you’re searching from. This means that a VPN or proxy server is likely the best tool when trying to find the cheapest price on a hotel.
How to use a VPN to find the best price
VPNs reroute your online traffic through an encrypted tunnel, allowing you to appear as if you’re accessing the internet from a completely different location. Not only is this a great way to hide your home IP address, but it also has the added benefit of anonymizing your online activities and getting around restricted content.
The best VPNs provide large networks of globally distributed servers that users can connect to and change their online locations. Plus, services such as NordVPN and ExpressVPN have created their own VPN protocols that help optimize your connection’s privacy, security, and speeds.
When using a VPN to find the best price for a hotel online, simply connect to a server in a less-wealthy city and search from there. In my experiment, I found that connecting to servers in either Phoenix or Salt Lake City provided me with the cheapest average hotel rates.
It’s definitely worth it though to try searching while connected to multiple different VPN servers. States with low to median incomes such as Mississippi, Arkansas, Alabama, and West Virginia might all be good places to search from if your VPN has servers in these areas. On the flipside, stay away from servers in notoriously high average income areas such as New York City, San Francisco, Chicago, and LA.
While a VPN might be the single best way to circumvent price discrimination, there are a few extra precautions you should also take as well.
Most VPNs offer an optional ad- and tracker-blocking service.
Sam Singleton
Browsing in Incognito mode for Chrome, Private browsing mode in Firefox, or other similar browser modes are also necessary. These browser privacy modes ensure that your history, cookies, or cache are not logged or used to identify you—which could happen even with a VPN if you’re not careful.
Most VPNs also come with built-in ad- and tracker-blocking features that you’ll want to turn on to keep any sneaky third parties from betraying your disguise. If you prefer, you could also use a separate ad-blocker instead.
Using a VPN and taking these additional steps will help set you up for the greatest possibility of success in finding cheaper hotel rates. Happy shopping.