A flight and hotel sold together often costs less than the same two bookings made independently. The saving is real and comes from the fact that a package price cannot be taken apart.
The bundle hides the component prices
Airlines and hotels are constrained by published fares and by parity agreements that limit undercutting their own distribution.
Inside a package, only the total is shown, so a supplier can accept a much lower rate without that rate becoming visible to anyone else.
This is the central mechanism. The discount exists precisely because it cannot be observed or matched.
Packagers buy in volume and commit early
Tour operators and large travel sellers contract for blocks of seats and rooms ahead of the season, sometimes with a commitment to take them whether or not they sell.
Taking on that risk earns a rate well below what an individual booking would obtain.
The buyer then has an inventory position to clear, and packaging is the mechanism for clearing it at prices that protect the supplier's public rates.
Distressed inventory finds its way in
Rooms and seats that have not sold as the date approaches are worth little to the supplier and can be released cheaply into packages.
The same night sold openly at that price would undercut the property's own rates and be seen by every booking site.
Packaging absorbs it quietly, which is why late package prices sometimes look implausible against the component prices shown elsewhere.
The trade is flexibility
Package bookings are typically governed by the operator's terms rather than the airline's or hotel's, and those terms are often stricter.
Changes, cancellations and name corrections can be expensive or impossible, and loyalty programmes frequently exclude package rates from earning or from status benefits.
Problems during the trip go through the packager rather than the supplier, which adds a step when something needs resolving quickly.
How to tell whether the bundle is genuine
The comparison that matters is the package total against the best independent total for the same dates, flights and property, priced at the same moment.
Bundles built from a cheap flight and an inconveniently located hotel can beat the alternatives on price while costing more in transport and time.
Where the components are ones that would have been chosen anyway, the package usually wins, and where they are not, the saving is on goods that were never wanted.