Hotel direct bookings Hotel OTA Commissions hotel OTA rates

Is there nothing hotels can do about rate parity?

Prabhash Bhatnagar
Prabhash Bhatnagar

hotel rate parity, hotel OTA commissions

Rate parity has always been a problem for hoteliers. The very thought of having external organizations decide the pricing strategy for an independent property doesn’t sit well with too many owners, and not without reason. Rate parity clauses were supposed to protect the integrity of hotel room rates and to ensure customers are getting the best deal – but things have moved far from that vision. Today, on top of having to maintain parity in rates across all online channels, some OTAs even restrict hotels from offering subsidized rates on their own brand’s website.

Un-listing the hotel from OTAs is simply not an option – online travel agencies form the spine of hospitality today, with the majority of bookings made online coming in from these portals.
So what can hoteliers do to ensure that these restrictions aren’t eating into their profits?

Optimize the direct booking website

There’s no better place for a hotel to receive a booking from than its own direct booking engine – these commission-free bookings contribute more to the property’s bottom-line. Moreover, the direct booking site provides visitors with all the details about the property, complete list of amenities, and perhaps even sights to see in the locality. However, in order to ensure that hotels are making the most of their direct booking channel, it’s important to have a well-optimized, responsive site – internet users are notorious for their impatience and if the site’s booking engine isn’t quick enough, they’ll just move on to an OTA.

Implement a balanced distribution strategy

Hotels can minimize their dependence on OTAs by ensuring that they don’t list the overwhelming majority of their rooms on a single portal – rather, a balanced distribution strategy that sells rooms on multiple channels is a much better way to go. That way even if one of the OTAs are forced to change their policies, any potential negative repercussions for the property are minimized. Hotels must also avoid OTAs that focus more on regions where they’ve already established their dominance.

Engage guests and reward loyalty

Social media remains one of the most powerful marketing tools available for hoteliers today – but merely being on the platforms isn’t going to help. Managers must ensure that all profiles are active and engaging with the audience on a daily basis. Loyal guests can be offered special perks this way, without breaking any rate parity agreements – a complimentary bottle of wine or room upgrade, these are things that guests will remember for a long time! Considering the direct booking has already saved the hotel a commission, the small price of such a loyalty ticket will barely impact the hotel’s bottom-line.

In the near future, hospitality may see radical sweeping changes with respect to rate parity. With France and Germany blatantly banning OTAs from trying to tie hoteliers up with rate parity agreements, other European countries have also begun considering similar action. Both Expedia as well as have had to oblige by discarding rate parity clauses in Europe as a result. While it’s too early to say whether we’ll see similar measures being implemented in the USA as well, there seems to be a general consensus that it’s only a matter of time. In the meantime, hotels can still make the most of the present by following these strategies!

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