Rate Parity

Rate parity for hotels implies that all distribution channels show consistent rates. When there is rate parity, potential guests do not get confused with various prices on different channels. Thus, they are more likely to choose your hotel over your competitors. All channels include but are not limited to online and offline travel agencies.

The room rate consistency throughout all channels can be obtained through agreements. This agreement is especially crucial for hotels working with online travel agencies because it ensures that all OTAs receive the same prices and hotel packages. As a result, no OTA will ever receive a secret or special offer from a hotel; instead, all OTAs will be treated equally and given the same prices and packages. In other words, it establishes a balanced relationship between hotels and online travel agencies. When a hotel wishes to verify if an OTA abides by the terms of the rate parity agreement, the hotel only needs to compare the packages and rates listed on OTAs with its website’s booking engine.

Importance of Rate Parity

Rate parity is crucial for direct hotel bookings and, most importantly, for the customer. When a traveler is looking for the best deals and packages online for their stay and comes across your hotel website and notices that the package is very expensive, they will automatically search for OTAs, where they can find the same hotel package for cheaper. This will cause your hotel to lose its reputation, customers, and direct bookings.

Additionally, you will have to pay an online travel agency a commission for this booking, which will result in a loss of profit and client loyalty. You should think about these comprehensively if you want to keep your hotel protected from these losses. If you wish to deal with OTAs, rate parity should be your top priority.

There are primarily two kinds of rate parity:

1. Wide rate parity

When there is wide rate parity, a hotel or lodging establishment consents to not reduce the room rates that an OTA charges for their property. In general, all distribution outlets are covered under this agreement.

2. Narrow rate parity

Hotels may provide lower rates than other OTAs under narrow pricing parity provisions, but only privately through their own websites. Using this kind of rate parity, hotels are able to provide reduced direct rates via offline or indirect channels including email, phone booking, and customer loyalty programs.

How to manage rate parity effectively

When using rate parity for your hotel, you might experience confusion and difficulty managing it. You might not have a sufficient marketing strategy or budget to attract more direct bookings, and your partner OTA may be promoting its packages more effectively than you are, which would result in you losing direct bookings and forcing you to pay commission to OTAs. Therefore, here are some strategies you can use for rate parity in your favor.

Enhance your booking offers

You can easily improve your offer by including extras like free Wi-Fi and free parking. Further, you may also provide access to public transportation for free to make a booking directly more beneficial for your guests. Furthermore, you may provide flexible cancellation terms. This will enable you to stay more competitive among all sales channels. It will help you increase your direct bookings even though an OTA-made discount on your hotel’s room rates despite the agreement if applicable. The extras provided on your booking engine will outweigh the savings your guest would obtain if they made their reservation through the OTA.

Use channel manager

Once you have a channel manager, you can quickly modify your live prices and availability across your entire distribution network. Each channel will always show the most up-to-date information thanks to the channel manager. For instance, BookLogic’s MaxiChannel Manager helps you monitor and update all room prices and availability on over 350 channels concurrently through a single interface.  Thus, you can easily check if all sales channels including your booking engine show consistent rates via BookLogic.

Utilize metasearch engines

In today’s world, metasearch engines are very popular. Many guests prefer metasearch engines to choose the channel they want to book from, in addition to browsing and comparing hotels. People usually book directly because they believe it to be more dependable. Local hotels can compare themselves to chains or larger hotels using metasearch engines. There are metasearch engine pricing models like commission-based instant booking that result in lower commission levels than OTAs. Using its pricing models effectively, metasearch engines can become more profitable than OTAs. That’s why, showing real-time availability, rates, and services on metasearch engines can drastically diminish OTA market shares. As a result, your hotel’s profit will be maximized, since the cost of utilizing metasearch engines can be lower than the cost of utilizing OTAs when the management is done smart. You may easily utilize metasearch engines for your property via BookLogic’s Metasearch Integrations.