The last few years have been a time of immense change and challenges for the hospitality industry, yet one challenge that hotels continue to grapple with is rate parity.
NB: This is an article from OTA Insight
During, and in the immediate period following the pandemic, any booking was a good booking and many hotels prioritised generating business and revenue in the short term; rate parity was less of a focus. That is no longer the case.
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When it comes to rate parity, and specifically undermining rate parity, the endless game of whack-a-mole has become a whole lot more complicated.
As businesses contend with maintaining the fine balance between incentivising direct bookings and ensuring their room rates are consistent across their distribution channels, the distribution landscape has become a lot less transparent.
In short, issues around parity have become even more difficult to track. In this blog, we’ll bring some of these trends to the surface.
Meta Sources and distribution health in hotel revenue management
‘Bait-and-switch‘ is intended behaviour designed to lure in a potential customer with an attractive, yet misleading, money-saving opportunity.
It is a valid parity issue since the bait-and-switch rates that are presented to potential guests drive business away from the brand, due to the fact that different prices are shown on different channels.
When searching for accommodation on a metasearch engine, the potential guest is presented with a rate lower than the rate for the same package found on other Online Travel Agencies (OTAs) or brand.com.
Seeing the cheaper rate piques the guest’s interest and they may click through to investigate further. However, once they arrive at the booking page, they then discover that the rate has increased and is now equal to, or even higher than the rate on the hotel’s own website.
So how does this happen?
Given that the root cause is often through non-contracted OTAs, this may occur in several ways.
One of the primary reasons for lower prices being available on non-contracted channels is due to wholesale rate leakage. Wholesale rates that are meant for business-to-business transactions resulting in a lower rate than what is available on the hotel’s official website.
Caching is another common way for bait and switch to take place. Either the guest will reach a point in their booking journey where they discover that the rate has expired, and a new, higher rate appears, or they will be advised that the hotel or room type they had wanted is sold out and no longer available to be booked.
Another common trick is to add taxes or other fees right at the end of the buying journey, leading to the rate being in line with, or sometimes even more expensive than the rate that appears on the hotel website.
