Rate parity is a contractual agreement between a hotel or bed and breakfast and its distribution agencies to keep room rates the same throughout all booking channels, including the hotel or bed and breakfast’s own website.
Rate parity benefits online travel agencies (OTAs), which have access to a large number of travellers and offer commission rates to property owners/operators.
There are two kinds of rate parity:
Wide rate parity
With wide rate parity, a hotel or bed and breakfast agrees not to undercut the room prices charged by an OTA for their property. This agreement applies to all distribution channels in general.
Narrow rate parity
Narrow pricing parity provisions permit hotels to offer lower prices than other OTAs, but only on their own websites. Hotels can offer lower direct rates through indirect or offline channels like email, phone booking, and customer loyalty programmes with this form of pricing parity.
Rate parity pros
It has the potential to increase your overall revenue. Price parity is an essential criterion in most OTA agreements. As a small lodging provider, you must collaborate with major players such as OTAs to boost your visibility and attract travellers from all over the world. When you prioritise rate parity, you’ll be able to readily connect with agents who can help you increase your revenue.
It can aid in the prevention of business issues. When your accommodation rates differ across platforms, you risk upsetting your clients and enraging your distribution partners. Inconsistency in accommodation rates also leads to overbookings, which is a nightmare for any travel company’s customer service. When you achieve price parity, you will notice that your B&B’s daily operations function much more smoothly than if you had variable room rates across your distribution network.
How to Implement Rate Parity in Your Hotel
Small hotels are caught between a rock and a hard place when it comes to rate fairness. On the one hand, you most likely lack the marketing budget to achieve the level of reach that your OTA partners possess. They bring you, new customers. To maximise revenue, however, you must drive more direct reservations.
Here are some ways to tackle the challenges of rate parity:
Make your rooms more inviting by grouping them together.
You can improve your offering by including things such as free parking, free wifi, and tickets to a nearby event. Your OTA may be selling the room at a discount, but the extras included with your full pricing are more valuable than the discount your guest would receive if they booked through the OTA.
Lower your rates to a limited audience
While you cannot advertise cheaper room prices publicly, you may do so to a limited audience. This means that in order to increase direct reservations, you can give discounts to:
- Twitter followers
- Facebook fans
- Inquiries by Phone
- Members of the Loyalty Program
Remember to include calls to action on your website to invite individuals to join these audiences. Inform them that they can receive exclusive discounts and promotions that are not available anywhere else.
Use meta-search engines
Metasearch engines are an excellent approach to compete for bookings with OTAs. Small hotels can bid to be included at the top of the list on TripConnect. Because this is a PPC model, it is expected to be less expensive than the OTA commission.
Metasearch engines are becoming increasingly popular among consumers. They can not only compare and search properties, but they can also select the channel through which they want to book these properties. They will almost always choose to book directly because it is perceived to be more reliable.
Improve the booking process
Booking directly with you should be as easy, if not easier, as booking through OTAs. Make it simple to comprehend what rooms are available and at what price (don’t overload with too many options), and make bookings straight through your website seem and feel secure.
You can rapidly adjust your live rates and availability across your entire distribution network if you have a channel manager in place. This ensures that every agent has access to the most up-to-date, reliable information at all times. The bottom line is that rate parity is important. So, connect with RateGain and get the right hospitality software for your business now.
