If hotels give up rate parity, they entirely give up the control of their sell rates across the internet. As your protection against evolving technology, rate parity is a must.
Today the internet has become a medium of search for the lowest room prices as OTAs undercut each other to gain their share of business.
Here are some important reasons to have rate parity:
- Without parity, you condition the market to search the internet as no one wants to pay more than they must.
- Rate parity sets a clear value of your rooms to be sold online.
- It is a contractual requirement by most OTAs.
- OTAs focus on rate parity so consumers don’t land up at the hotel directly. This has resulted in a decrease of walk-ins that can be used to achieve higher ARRs.
- Not maintaining rate parity by having a lower price is dangerous as hotels could quickly lose visibility on the OTAs and internet by doing so.
- Hotels can sell online package rates with value adds. This avoids rate parity issues while ensuring you’re able to deliver value for your guests.
A “meta” morphic threat
The rise of metasearch engines such as TripAdvisor, Trivago and Google Hotel Finder disrupted the OTAs. As consumers are faced with price options upfront and that may affect bookings, metasearch has become a threat to OTAs. It also adds more pressure on the OTAs to not have rate parity as each one wants to come on top of the metasearch list with the lowest price.
In such a scenario rate parity is even more relevant.
For consumers who are often faced with a list of accommodation options with the same price, the choice is often driven by a visit to the hotel’s website to make a final decision. While hotel websites make it to the list of metasearch giants, they’re often towards the bottom of the pile. Hoteliers are best placed to make the most of undecided consumers who visit their site to convert.
Some OTAs such as Expedia have introduced Trivago in response to this new technology, while Google and TripAdvisor works with suppliers (accommodation providers) and OTAs to facilitate this process. The two have claimed they have no plan to become an OTA.
Online bookings are a constantly evolving space and one needs to watch closely. If consumer preferences change
from OTAs to metasearch, hotels could be in a more favourable bargaining position.
The takeout
The bottom line is rate parity matters. It is important that both you and your distribution agents make an effort to achieve rate parity, and to maintain rate parity even as your room rates fluctuate throughout the year. Equally important is the need for flexibility and supporting key booking partners in the OTA space with special rates to support campaigns. You’ll be wise to invest in tools such as a STAAH Channel Manager to maintain this all-important rate parity with ease and precision.
This article is written by Guest writer Vishal Ajwani originally published in STAAH’s New E-Book.
About the Guest writer
Vishal Ajwani is the founder & director of revmerito , a strategic consulting firm which specialises in Online Revenue Management, E Distribution, GDS/IDS and Technology consultation.