Rate parity is a term that always warns hoteliers and can be a growth barrier for even younger and newer players. Rate parity is the practice of maintaining the same room type and same rate on all distribution channels / booking platforms, irrespective of the hotel’s own website or OTA commissioned by an OTA. The purpose of this exercise is to create an equal level playing field for all players. Both the hotel and the OTA agree to rate parity policies when signing up with the OTA.
Sometimes, this flat field makes it difficult for new players to take part in this fierce competition, and their wings stop before the wings are spread.
How should hotels look for a rate parity?
The practice of rate parity began to protect the interests of OTAs from situations where hotels could lower their website rates and reduce OTAs.
Why do hotels rely so much on OTAs?
OTAs provide a ready-made platform for booking a hotel by entering the online booking world from the very beginning. They do not have to spend heavy on marketing, just negotiate for better deals with the right OTAs and they are ready to earn. Hotels can easily see OTA commissions as the cost of their marketing but with higher success rates. Thus, OTAs give hotels some benefit which eliminates the difficulty of rate parity in hotels.
What are the challenges of rate equality for emerging and small hotels?
Every single booking in small and new hotels is important. Already, paying thin commissions on OTAs from thin margins makes it very difficult for hotels. This is where booking directly can prove to be a game changer. But bringing direct bookings without promotional promotions and price fixing can be a final task. Many times, OTAs will request that hotels be kept in the loop when pricing any promotional campaigns or discounts on their websites. To prevent any violation of the rate parity clause, sometimes smaller hotels exclude entire house divisions from the OTA and sell it on their own website on their own website.
Competing with OTAs for pricing is difficult for smaller hotels, as OTAs are known to lower prices than agreeable prices by reducing commissions. We do not live in a perfect world!
For this, hotels should keep an eye on various OTA prices to keep them competitive. When OTA channels are not directly connected to a hotel’s PMS system through a channel manager, it is more difficult to manage the rate parity then hotels will have to login to multiple systems to update their rates. However, if a hotel uses hotel technology tools to handle all of this, it is much easier and faster.
Very few people think that in these situations, small hotels are stuck between a rock and a hard place, as stated on the one hand, they do not have the marketing budget to achieve the kind of OTAs they reach. On the other hand, it is difficult for them to pay big fat commissions on OTAs. Furthermore, the OTAs bring their business. Thus, hotels want to drive more direct bookings. But this course requires more dollars to spend on marketing dollars, they are in this vicious cycle.
Here are some strategies that hotels can use to meet the challenge of rate equality
Creating Bundled Packages
Hotels can increase the price of OTAs equally by adding parks such as free parking, Wi-Fi, wine testing sessions, complimentary breakfast, sightseeing, free pick-up etc. in practice without violating the rules of rate parity over OTAs for hotel OTAs. Makes a better deal than
Lower your rates for a limited audience.
Hotels can reduce prices for users of any age group, category, closure user group (CUG) or mobile app. Run email promotional offers for CUG members or on booking mobile applications. It can help direct bookings on their website and mobile app without violating the rate parity clause.
Loyalty programs and customer involvement
Another way to increase direct bookings is through loyalty programs. Loyalty programs not only save OTA commissions but also provide many benefits. Recurring bookings from a loyal customer are cheaper than acquiring a new customer. Above all, hotels are aware of their likes and preferences that enable them to serve them better. It spreads the word positive for the brand and paves the way for more direct bookings.
Use meta search engines
Meta search engines such as TripAdvisor and Trivago can be considered savvy for smaller hotels. Small hotels may even be featured at the top of the list on Tripconnect because it serves as a PPC model different from the Commission in the case of OTAs. Metasark engines are quite popular among customers as they not only provide a comparison between different features but they also allow you to choose the cheapest channel to book a hotel. Consumers often resort to direct book bookings as direct bookings are considered more reliable
User-friendly websites and booking process
To encourage direct bookings, hoteliers must ensure they have the necessary infrastructure, which motivates and promotes direct bookings – a comprehensive user-friendly website with a clean interface provides all the information they need without having to search. In addition, hoteliers must ensure that the booking process is rather complicated so that the prospects do not return. The OTA has an obvious edge in this category, but the hotels do not have the option of bringing their online infrastructure equivalent to the OTA.
From the above discussion we can assume that rate parity agreements can reduce the direct booking of any hotel; There are several factors that prove that OTAs are actually good partners with hotels. Hotels can use various bypass strategies to reduce the rejection of rate parity and at the same time enjoy a large number of books from the OTA.