Rate disparity, if left unchecked, can seriously impact your hotel’s bottom line. Hotels often find themselves with lower rates on OTAs and other third party channels than they do on their own website – that’s not good! So what can hotels do?
This article will cover:
- The impact of rate disparity on your hotel’s bottom line
- Causes of rate disparity
- How hotels can combat rate disparity and encourage direct bookings
Let’s get started.
Why Does Rate Disparity Actually Matter?
What does rate parity mean, exactly? According to Eye for Travel, it can be thought of as “maintaining consistent rates for the same product in all online distribution channels – Expedia, Orbitz, Hotwire, etc. – regardless of what commission the OTA makes.” It also applies to rates on your own website compared to third party sites.
Rate disparity, then, is when wires get crossed and lower rates are offered on some or all OTAs than the rates your own site.
Note: The reverse is much rarer. Rate parity clauses in OTA contracts usually prevent you from offering a lower rate on your own site. However, that’s not always the case – check your contracts to see, as not all of them will require rate parity.
Why is rate disparity important? There are two parties it matters to: you and the customer! It also affects OTAs, but they are mostly protected from harmful effects by their contracts – and if the price is lower on their site, it gives them an advantage.
For customers, it can be a matter of trust. If rates on your own “Best Rate Guaranteed” site are more expensive than those on the OTA, you might lose their trust or lead them to believe that an OTA is offering ‘discounted’ prices.
For hotels, when OTAs offer a lower price than your own website, there’s no incentive to book direct – and you’re still paying those OTA commission rates.
Causes of Rate Disparity
If your hotel frequently experiences rate disparity issues, it’s important to know that it isn’t always deliberate. In fact, it’s probably mostly accidental.