Rate parity is always a term that alarms hotels, and can be a growth barrier for both small and new players. Rate parity is a consistent practice of maintaining the same type of room and sharing across channels / booking platforms across all channels / booking platforms, whether on their hotel website or with OTA, commissions earned by any OTA. The goal of this practice is to create a playground for all players to level up. Hotels and OTAs must agree to evaluate the matching rules when registering with OTAs.
At times, this level playing field makes it difficult for new players to compete in this fierce competition and even drowns their wings.
How do hotels look for rate parity?
The practice of rate matching was created to protect hotels from OTA interests by reducing their website rates and reducing OTAs.
Why do hotels have so much confidence in OTA?
OTA offers a platform for any hotel from the first day they enter the online booking world. They do not have to spend heavy on the market, they need to negotiate better deals with the right TAOs and are prepared to make revenue. Hotels can easily look at OTA commissions as a cost to their market, but with a higher success rate. Therefore, the advantages that TAOs offer to hotels cancel out the price parity disadvantage of hotels.
What are the challenges for small hotels and hotels?
In a small and new hotel, every reservation is essential. Paying high commissions on OTA's right margins is very difficult for hotels. Therefore, live bookings can be a game changer. However, gaining live bookings can be a daunting task without any manipulation of promotional campaigns and prices. OTAs will often ask hotels to keep the loop on their websites when they run a promotional campaign or price discount. In order to avoid a break in the Rate Parity clause, some small hotels exclude the entire room category from OTA and sell them on their website at their prices.
Competing with OTA prices is difficult for small hotels because the prices below the OTAs are lowered by reducing their commissions. We are not living in the perfect world!
This requires the hotel to check the prices of different OTAs to ensure that their prices are competitive with them. With the PMS system of hotels that are not directly linked to OTA channels through a channel manager, rate parity is even more difficult to manage. Hotels then need to access multiple systems to update their rates. However, it is much easier and faster if the hotel uses hotel technology tools to handle all this.
Few think that in this situation, small hotels are stuck between a rock and a hard place, as he says, on the one hand, they do not have the marketing budget to reach the reach of OTA. On the other hand, it is difficult for their gross commission to pay OTAs. In addition, OTAs bring business. This is why hotels want to book direct bookings. However, this course requires more marketing money. They are in this vicious circle.
Here are some tactics that hotels can use to address the challenges of price parity
Creating package packages
The hotel can increase their offerings by keeping the OTA price the same. Hospitality, free parking, Wi-Fi, wine tasting, complimentary breakfast, sightseeing, free parking, etc. Above OTA, without violating the parity rules, the same hotel price offers a better price than OTA.
Reduce rates to a limited audience.
Hotels may lower prices for age groups, category, Close User Group (CUG) or mobile application users. Run email promotional offers for CUG members or mobile app bookings. This can drive direct bookings on their website and mobile application without violating the rate parity clause.
Loyalty program and customer engagement
Another way to promote live bookings is loyalty programs. Loyalty programs offer many benefits to save on OTA commissions. It is much cheaper to buy a loyal customer than to buy a loyal customer. In addition, hotels are better aware of their options and preferences. This marks the spoken word and opens the way for direct booking.
Use Meta Search Engines
Meta Search engines like TripAdvisor and Trivago can be considered a small hotel exception. Small hotels may also appear on TripConnect's list, as OTA commissions do not work on a PPC model. Metasearch engines are popular among consumers because they only have a comparison between different properties, as well as choosing the cheapest channel to book the hotel. Consumers often see them go for live books, as the difference is not large, because direct bookings are considered reliable.
Website for users and booking process
Boosting live bookings ensures that hotels have the necessary infrastructure, such as a comprehensive website that encourages and promotes live bookings, providing a clean interface and necessary information, without having to search. In addition, the hotel must ensure that the booking process is easy so that the solution does not bounce. OTAs have a clear edge in this department, but hotels do not allow their online infrastructure to match OTAs.
Beyond the discussion, we can accept that Rate Parity agreements can refund direct hotel bookings; There are many factors that prove that OTAs are good partners in hotels. Hotels can take bypass strategies to alleviate the challenges of Rate Parity and at the same time enjoy the large number of OTA reservations.