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Worlds apart: How rate disparity varies around the globe

Undercutting is a geo-specific issue. North America and Europe are getting their rate parity in order - but what about the Asia Pacific region?

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Worlds apart: How rate disparity varies around the globe

What do hotels in Kenya, Venezuela, and French Polynesia have in common?

Answer: they're all in the unenviable position of having an undercut rate of more than 50%.

Kenyan hotels are out of parity 52% of the time, French Polynesian hotels 75%, and Venezuelan properties a concerning 77%. In most cases, travellers to hotels in these countries will find cheaper rates on OTAs than directly with the hotel.

In order to provide crucial benchmarking data to our hotelier partners, we track disparity trends across the globe so clients can see how they measure up. And this tracking often reveals unexpected truths: in this instance, the sheer inequality of rate parity across the globe.

Rate parity by country

Undercutting is very much a geo-specific issue. The heat map above (drawn from the data collected over millions of searches across all of our clients) reveals clear disparity hotspots, where the rate at which prices are being undercut approaches the dreaded 50% mark. The greener the country, the closer its undercut rate is to 0% - meaning it's either in almost-perfect parity, or it consistently offers cheaper rates than OTAs.

As is perhaps to be expected, hotels in North America and Western Europe are more on top of their parity than their equivalents in, say, Indonesia. Well-publicised campaigns from high-profile hotel groups such as Marriott and Hilton have long advertised both 'Best Rate Guarantees' and the benefits of booking direct, both of which depend on well-maintained rate parity. In addition, regulation of parity clauses is getting tighter. Italy is the latest European nation to outlaw the clauses altogether. Where parity clauses do exist, there tends to be at least a semblance of respect for them on both sides. While both OTAs and hotels undercut each other, we usually see the guilty party backing down once the other side catches them at it.

By contrast, it's common for rate parity agreements between hotels and OTAs in the APAC region to be ignored completely - when they even exist at all.

But the Direct Booking Movement is gathering momentum in the APAC region. OTAs are increasingly aggressive with both their marketing and their commission increases, and hotels are looking for ways to redress the balance. We know hotels can provide a better guest experience if a booking comes direct: being able to communicate with the guest right the way through the booking funnel makes a huge difference to the level of service a hotel is able to provide. For a large swathe of the travelling population, booking direct will only be preferred when the price is right.

Achieving perfect parity in Asia definitely won't happen overnight. But it will be interesting to monitor how things change over the months to come. All we're saying is, watch this space...

About The Author

Lily is Lead Product Marketing Manager at Triptease. When she's not investigating the industry or spreading the word that #DirectIsBest, she enjoys music, cycling, and obscure radio quiz shows.

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