How small and fledgling hotels can lessen the effects of rate parity

Website design By BotEap.comRate parity is a term that always alarms hoteliers and can even be a growth barrier for new and smaller players. Rate parity is the practice of maintaining consistent, consistent rates for the same room type across all distribution channels/booking platforms, whether on the hotel website or OTAs, regardless of any commissions an OTA earns . The goal of this practice is to create a level playing field for all players equally. Both hotels and OTAs have to agree to rate parity rules when they sign up with an OTA.

Website design By BotEap.comSometimes this level field makes it difficult for new players to compete in this fierce competition and stifles them before they can even spread their wings.

Website design By BotEap.comHow should hotels consider rate parity?

Website design By BotEap.comThe practice of rate parity arose to safeguard the interests of OTAs from situations where hotels can lower their website rates and cut OTAs.

Website design By BotEap.comWhy do hotels rely heavily on OTAs?

Website design By BotEap.comOTAs provide a ready platform for any hotel to get bookings from the first day they enter the world of online booking. They don’t have to spend much on marketing, they just negotiate better deals with the right OTAs and they are ready to generate revenue. Hotels can easily see OTA commissions as their marketing costs, but with a higher success rate. Therefore, the advantage offered by OTAs to hotels somewhat offsets the disadvantage of rate parity for hotels.

Website design By BotEap.comWhat are the rate parity challenges for small and fledgling hotels?

Website design By BotEap.comIn small and new hotels, each individual reservation is crucial. Paying high commissions to OTAs with already low margins becomes very difficult for hotels. This is where direct bookings can be revolutionary. However, getting direct bookings can be an arduous task without promotional campaigns or price gouging. Hotels are often asked by OTAs to keep them informed when running promotional campaigns or discounted prices on their websites. To avoid any violation of the rate parity clause, small hotels sometimes exclude the entire room category from OTAs and sell it on their website at their own prices.

Website design By BotEap.comCompeting with OTAs on prices is difficult for small hotels as OTAs have been known to undercut prices by cutting their commissions. We do not live in a perfect world!

Website design By BotEap.comThis requires hotels to monitor the prices of various OTAs to keep their prices competitive with them. When OTA channels are not directly linked to a hotel’s PMS system through a channel manager, rate parity is even more difficult to manage. Hoteliers then need to log into various systems to update their rates. However, it is much easier and faster if the hotel uses hotel technology tools to manage all of this.

Website design By BotEap.comFew are of the opinion that in this situation, small hotels find themselves between a rock and a hard place, as the saying goes, since on the one hand, they do not have the marketing budget to achieve the type of reach that OTAs provide. . On the other hand, they find it difficult to pay the big commission to OTAs. Also, OTAs bring them business. Therefore, hotels want to generate more direct bookings. However, this course requires more dollars to spend on marketing. They are in this vicious circle.

Website design By BotEap.comHere are some tactics hotels can use to tackle rate parity challenges

Website design By BotEap.comCreate bundled packages

Website design By BotEap.comHotels can increase their offers by keeping the same price as the OTA price by adding benefits such as free parking, Wi-Fi, wine tasting sessions, complimentary breakfast, sightseeing tours, free pickups, etc. This practice can help them to have a clear advantage over OTAs without violating rate parity rules, since for the same price the hotel offers a better deal than OTAs.

Website design By BotEap.comReduce your fees to a limited audience.

Website design By BotEap.comHotels can reduce prices for an age group, category, nearby user group (CUG), or mobile app users. Run promotional offers via email for CUG members or on mobile app reservations. This can help them drive direct bookings on their website and mobile app without violating rate parity clause.

Website design By BotEap.comLoyalty program and customer commitment

Website design By BotEap.comAnother way to boost direct bookings is loyalty programs. Loyalty programs provide multiple benefits other than just saving OTA commissions. Getting a repeat booking from a loyal customer is much cheaper than acquiring a new customer. In addition to that, hotels are aware of your choice and preferences that allow them to serve you even better. This spreads positive word of mouth for the brand and paves the way for more direct bookings.

Website design By BotEap.comUse metasearch engines

Website design By BotEap.comMeta search engines like TripAdvisor and Trivago can be considered as a savior for small hotels. Small hotels can even be listed at the top of the list on TripConnect as it works on a PPC model as opposed to commissions like OTAs. Metasearch engines are quite popular among consumers as they not only provide a comparison between different properties, but also allow them to choose the cheapest channel to book the hotel. It is often seen that consumers resort to direct booking as long as the difference is not huge, as direct bookings are considered more reliable.

Website design By BotEap.comUser friendly website and booking process

Website design By BotEap.comTo drive direct bookings, hoteliers need to ensure they have the necessary infrastructure in place to drive and drive direct bookings, such as a comprehensive, easy-to-use website with a clean interface that provides all the information you need without having to search for it. Also, hoteliers need to make sure the booking process is simple rather than cumbersome so prospects don’t get caught up. OTAs have a clear advantage in this department, but hotels have no choice but to match their online infrastructure to that of OTAs.

Website design By BotEap.comFrom the above discussion, we can assume that while rate parity agreements may slow down direct bookings for any hotel; There are numerous factors that show that OTAs are, in fact, good partners with hotels. Hotels can adopt various circumvention strategies to mitigate rate parity challenges while enjoying the high number of OTA bookings.