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I was recently booked in to the Hyatt Ziva All Inclusive in Puerto Vallarta booked direct through the Hyatt website. The room rate was approx. $650 per night.

This evening, I was casually browsing on Expedia and found that same room, room type and for the same dates availabel for $300 per night all in.

Expedia was indicating that the room was 55% off as of tonight.

This is a significant discount...how does Expedia manage to provide the same room for this price?

Hotels have revenue management departments that seek to maximize profit for the hotel by selling rooms at different prices through different sales channels. The hotel sold the room to Expedia for that price (actually, less than that price, since Expedia needs to take its commission).

It's important to make sure the prices are exactly comparable. Sometimes rooms are significantly cheaper if they're 100% prepaid in advance (non-cancellable or stricter cancellation policy). There can also be differences in the room type, package offers (such as breakfast), and sometimes amenities (I've even seen a charge for WiFi if you don't book directly with the hotel).

Many hotels, including Hyatt, have a best-rate guarantee program if you book directly through them. They'll match a lower price and give you a bit extra. The hotel would rather get your direct booking (and not have to pay a commission to the agency website). If you see a better deal online than what the hotel offers directly, it's usually worth contacting the hotel to see if they can match or beat it themselves.

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, they have at least minimised their anticipated loss by 10€.