Hotels and Online Travel Agents (OTAs) need to work together to find a collaborative approach that maximises revenues, builds brand confidence and rewards consumer loyalty, according to a panel of experts speaking at Arabian Travel Market (ATM).
According to a report published on April 23, 2018, by Colliers International on ATM’s Global Stage, rate parity agreements have led to a turbulent relationship between hotels and OTAs in recent years.
The findings of the report entitled ‘Alternative Accommodation – Driving Growth for Destinations or Disruption’ were discussed by a panel of experts from Wego, AccorHotels, Expedia Group and Colliers International.
The essence of rate parity is to have the same rate for the same product across all distribution channels. However, rate undercutting has created issues between hotels and OTAs and as a result, significantly reduced consumer confidence in brands.
Filippo Sona, Director, head of hotels Mena, Colliers International, said: “Consumers are comparative shoppers, so when they see that the rate on a hotel website is higher than an OTA for the same product, this creates a negative sentiment about the brand in their minds. As the undercut rate percentage by OTAs increases, there is a drop in the booking conversion on the hotel’s website.”
“Today’s consumers have a more sophisticated mindset and level of needs, and as a result, rate parity is hindering the ability of OTAs to make more money and hotel companies to offer higher average room rates. If we removed the rate parity mechanism, we would be able to more effectively fulfil the needs of OTAs and hotels, while providing a more personalised product to consumers.”
With continuous technological advancements in the online travel market such as metasearch engines, blockchain and augmented analytics, new strategies need to be devised to win back consumer confidence and increase their brand loyalty.
