Hospitality Tip Of The Day (52)
#hospitalitytipoftheday (Daily Hospitality tips for Hoteliers)
The role of rate parity agreements
Due to the power OTAs have in the on-line world, they typically insist on a clause in their contract commonly referred to as rate parity. Rate parity prevents hotels from offering a lower price elsewhere on the Internet, including to customers that try to book directly with the hotel itself.
Rate parity agreements are essential to preserving the OTA commission model. This is because the price the guest pays would be the same no matter whether they book via a third-party website or directly with the hotel.
With rate parity agreements hotels are actively prohibited from marketing any rate which is cheaper than the rate offered by the OTA. This makes hotels unable to offer a lower price to customers that book direct, even though the cost for customers arriving directly is insignificant.
Hotels can monitor rate parity compliance of their own hotel and the ones of their competitors via a rate shopping platform. The premium plan of Hotel Price Reporter includes a rate parity monitoring service.