Maintaining rate parity is a consistent challenge for hotel revenue managers. In today’s hyper-digital travel industry, search engines, OTAs, and other digital platforms all promise a ‘lowest price guarantee,’ but few live up to the guest’s expectations.
NB: This is an article from RateGain
Inevitably, a guest finding a wide disparity in accommodation rates across channels loses ‘trust’ in the hotel and is less likely to stay loyal in the long-term. It’s no wonders that travelers are also confused about where to find the best deals. They end up using search engines and OTAs, decreasing the number of direct bookings on the hotel sites. In all, the guest loses trust and the hotel loses profits and brand reputation. There’s so much at stake.
Hence, managing parity across channels is not a task; it’s a bigger responsibility. Let me elaborate on my thoughts in the subsequent words.
Here’s What Most of us Know and Understand
While rate parity is an accepted norm, maintaining it across platforms is complex. While acquisition of guests through OTAs is expensive for a hotel, OTAs offer indispensable services—helping them increase brand awareness, reach, form fills and bookings. Room prices are flexible but must always remain the same across all distribution channels, both direct and indirect. According to a survey of approximately 600 participants conducted by Phocuswire, approximately 50% of hotels are heavily reliant on bookings from OTAs, even if they violate rate parity agreements.
Despite all measures, most hotels are out of parity on most days of a year. The disparity issues can arise due to various issues; it could be made deliberately or as a result of human or technical error. The result is the same; loss in direct bookings and thus revenues.
The problem doesn’t end here. In some cases, the hotel is not even aware who the defaulter is. On top of that, only a quarter of the survey said, they took corrective action when rate disparity issues were detected.
Here’s is What a Handful of us Practice
Fixing revenue leakages is not just about maintaining parity. The driving principle is brand integrity while being able to change rates in-sync with market dynamics. Rate integrity aims for the perfect balance between consistency and flexibility.
Now, while it may sound simple, the definition of ‘rate integrity’ isn’t so straight forward. It may differ from revenue manager to revenue manager. While some focus on fair pricing, others might want to provide the maximum value for price to their guests. Similarly, it can involve revenue managers rationalizing price discounts to demonstrate that the hotel isn’t changing rates without reason – rather, the hotel is working to ensure discounts are consistent across brand sites, OTAs, and other distribution channels.
The study we mentioned above also highlighted the importance of rate integrity in today’s market: 85% of respondents scored the issue at an 8, 9, or 10 levels of severity; less than 4% rated it 5 or below. And 75% felt that they were “powerless” in address disparity and achieving rate integrity across platforms.
Here’s What All of us Should Know to Increase Direct Booking & Brand Reputation
In a hotel revenue growth strategy, rate integrity and parity go hand in hand. While maintaining rate parity to ensure consistent pricing, a hotelier must practice rate integrity. It’s the best as well as the most difficult state to achieve. Therefore, it’s important for the next-gen revenue managers to take help from technology for:
- Track the Knowns: Next-gen technology can help revenue managers maintain rate parity across hotel properties and OTAs by simply tracking them. For instance, Machine Learning driven, cloud-based solutions (like our PARITY+) addresses the rate parity concerns of leading players in the industry, by allowing them to keep a hawk’s eye over parity violations.
- Track the Unknowns: The technology should also allow you to monitor each of the accredited and unaccredited OTAs for parity violations.
- Identify the Real Defaulters: Advanced technology platforms such as also help revenue managers identify the real defaulters.
- Take Actions: Once the real defaulters are identified, validate the violation and notify the violators in the most simplified way. For example, the closed-loop feature of the platform helps the revenue manager to identify the real defaulters and resolve parity violations.
- Do it all instantly through instance notifications.
A user-friendly, next-gen rate integrity platform can really help revenue managers to put a halt on rate disparity, revenue decline, and negative brand reputation. A next-gen revenue manager can experience an average of 10-12% increase in bookings by solving parity issues through a platform that offers rate integrity.