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What you need to know about hotel rate parity in 2020

If you don't want to lose bookings to third parties, monitoring and resolving disparities should be your top priority. Here's our guide on how to do it.

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What you need to know about hotel rate parity in 2020

This is an extract from the Triptease Direct Booking Playbook: Foundation Level. To learn more about how to fix your parity issues, ensure your website and booking engine drive conversions and much more, download the entire Foundation Level here.

Guests will always find the cheapest price online. If you’re not paying close attention to the rates available for your rooms across the web, it’s highly likely you’ll be losing bookings to distribution partners, and potentially damaging your hotel's brand as a result.

Monitoring and resolving those pricing issues should be your top priority. Read on to find out how parity issues occur and what you need to do to start fixing the situation today:

How do rate disparities occur?

Disparities happen when lower rates are being offered by OTAs and other distribution channels than are being offered on your own direct website. Sometimes this happens with your consent - if you’ve arranged an exclusive direct promotion with your OTA market manager, for example - but can also easily happen without your knowledge.

Disparities can sometimes be the result of administrative issues, such as not closing out rates on your channel manager that have become out-of-date.

They can also be the result of OTAs putting your wholesale rates on sale, using a different currency conversion then your direct website, or selling rates that they are not entitled to sell.

There’s also a chance that they will simply advertise prices lower than your direct rates, knowing that the commission hotels are paying to them will mean they don’t make an overall loss.

All of these tactics ensure that their website will appear better value than your own direct channel, and guests will continue to believe that OTAs are giving them the best deals.

"The biggest meta mistakes a hotel can make is not having your rates in check! Without rate parity, you better stay away from metasearch."

Dr Jan SammeckTriptease, Hotel Hero and Director of eCommerce at Deutsche Hospitality and author of 'Online Marketing for Hotels'

How do disparities impact your hotel?

The obvious result of all of this is a loss in revenue for your business. Our research shows that hotels undercut between 0-10% of the time converted visitors to their booking engine at an astonishing 34% higher rate than those being undercut 30-40% of the time.

In addition to your financial loss, a guest booking via an OTA is also a lost opportunity to build a direct and personal relationship with your customer: they remain loyal to the OTA, and you lose access to their data and potential future custom.

Finally, as metasearch and other traffic acquisition strategies continue to revolutionize the way that customers book their stays, hotels with bad parity will find that they are paying to advertise that they don’t have the cheapest rates when bidding in metasearch auctions.

Learn more about the pillars of direct booking success:

How to find causes of disparities?

1. Get parity monitoring features that work for you

Ideally, you’re looking for a service - such as Triptease’s Surge Alert emails - that will let you know your hotel is experiencing unexpected surges in price undercutting. Another key feature is accessing screenshot evidence of disparities that occur. This will give you much greater credibility when discussing your parity issues with your OTA partners. If you have visible evidence of their undercutting, you are on much stronger ground.

2. Start where it’s hurting your business the most

For hotels with significant parity issues, the best approach is to start by resolving your most impactful disparities first. Look at each disparity in terms of the amount you’re being undercut and the number of times it’s been seen by searchers to work out which disparities should be fixed as a priority. In the Triptease Platform, we display your top three most impactful disparities as soon as you enter the Parity section of the tool, to help speed up that process.

“Most wholesalers can limit their distribution circles to avoid such rate leakages. But unless you specifically ask them to do so, they will continue distributing these rates to their entire network. You need to ensure that your wholesale rates are distributed only to those distributors who will sell your rates packaged!

Nicolas Durand, Hotel Heroand Senior Director of Global Distribution at Jumeirah Hotels & Resorts

3. Place test bookings

As Hotel Hero and Senior Director of Global Distribution at Jumeirah Hotels & Resorts, Nicolas Durand, has previously outlined, by placing test bookings (either manually or via a technology partner) hoteliers will then be able to identify those bookings in their PMS to see which partners are not respecting their contracts. You need to ensure that your wholesale contracts have a specific clause that allows these rates to be only bookable as part of a package. If you don’t do this, you will not be able to take action against them.

How to fix your parity issues?

1. Build strong OTA relationships, but know when to end them too

Outside of regularly checking in on your rate parity using a parity monitoring tool, you should also take some time to focus on your relationship with your OTA and distributor account managers. Check in with them even when you’re not having parity issues and build a healthy working relationship - this can make all the difference when problems do arise.

2. Take a wide lens look at your parity trends

On a less day-to-day basis, you should also be taking a step back to review your overall parity trends. Which partners caused you the biggest headache last quarter, and what are you doing to change that? Some hotels set up a ‘three strikes and you’re out’ policy and simply cut off supply to partners who continually cause parity issues. Others make time to regularly review who they are working with and exactly what agreements are in their contracts. Having complete clarity on who has a licence to sell your rooms and at what price will help you stay in control.

"There is always power in numbers. Teaming up with other hotels can lessen the cost of litigation - and it carries more clout for the notice or lawsuit! You can share the cost and the expected outcome among multiple plaintiffs."

Colette LabisTriptease Hotel HeroDirector of Partnerships & Distribution at Westgate Resorts

3. Give guests a reason to book even when you’re not in parity

Add messaging to your website that let’s potential guests know about the benefits of booking direct, even if you don’t currently appear to have the best price. Maybe you offer price matching, maybe you have a range of incredible free gifts and special offers for customers who book directly with you - let your website visitors know!

At Triptease, we have an alternative message that can appear on a hotel website in place of Price Check at times when the hotel is being undercut. This type of message can be used when a guest has run a search on your website and you’re not in parity. It encourages them to get in touch with your hotel directly to sort that out.

4. Think about OTAs differently

Hotels are not as powerless as they can sometimes seem. According to Dr Jan Sammeck, Hotel Hero and Director of eCommerce at Deutsche Hospitality, “Many hotels see themselves as victims of OTAs, but there are tools out there to change things for you. OTA competition and disparities are essentially your own ‘fault’. It’s so important to keep steering things in the right way you want to be: with contracting, online marketing, e-commerce, booking engine optimization or by improving UX design on your hotel website. It’s in your control!"

Want to learn more about price monitoring, rate parity, distribution and much more to build the strongest possible digital strategy for 2020?

About The Author

The Triptease Platform is built to help hotels take back control of their distribution and increase their direct revenue.

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