Rate Parity – Double Standards?
Lorna McNamara, Marketing Director
Back in 2012 HSMAI predicted the demise of Rate Parity for Hotels. Over a year later, rate parity requirements by the OTA’s still have a significant impact on hotels – in particular those who are not part of an international brand.
In addition to placing restrictions on how you best manage your yield online, many of the OTA’s then contradict that requirement by encouraging hotels to run flash sales or smart deals that would in essence place the OTA at a cheaper rate than direct with the hotel. While many hotels ensure that they match the deal rate on their own site, many times this isn’t actioned – and only serves to increase the hotel’s dependence on third party bookings over direct bookings, with a higher cost of delivery.
Nobody can deny the relevance of the online distribution channels and the value of the business they bring to the hotel industry. However, control over the price at which a business can sell their product at any given time is an important factor in effective yield management. There are indicators in the industry that the issue of rate parity is being tackled by a growing number of independent hoteliers. Earlier this year a number of hotel chains decided not to renew their OTA contracts over rate parity issues (Read more on EyeForTravel) and there is growing support for rate parity legislation, which could allow hotels to take back control of their pricing strategy and implement varying pricing levels depending on markets and demand levels.
Monday, July 15, 2013