However, while this strategy may work well for larger chains, smaller independent and boutique establishments may find themselves at a disadvantage. Marketing and differentiating their product can be difficult and cost-prohibitive for smaller hotels operating without the advantage of multiple channels.
Today, we explore the problem and offers possible solutions.
Distribution Channels: Commoditization versus Differentiation
Is the issue of rate parity simply about different parties agreeing to maintain consistent rates, or is there more behind the rate tension between hotels and OTAs? For hoteliers, at least, complaints against OTAs typically include their high commission rates, what hotels view as the hijacking of the hotel’s brand, and a lack of control over marketing and the management of customer relationships.
In fact, the issues are far more complex than just agreeing on rates, and, in many cases, hotels may even have unintentionally signed contracts agreeing to the unfavorable terms they would like to change.
In 2015, Travel Tripper compared a number of standard OTA contracts and discovered that they normally contain the following (or similar) clauses:
- The Accommodation agrees not to specifically target Guests that have been obtained via OTA in either online or offline marketing promotions or solicited or unsolicited mail.
- The OTA shall be entitled to give a discount on the room price at its own costs to its closed user group members.
Both clauses explicitly remove a hotel’s ability to contact certain groups of guests, allowing the OTAs to “own” guests and their data.