Rate parity is always a term that alarms hotels and can also be a growth barrier for both small and new players. Rate matching is the custom of maintaining the same and same room rates on all distribution channels / booking platforms, except for the hotel website or OTA commissions earned by an OTA. The goal of this practice is to create an equal playing field for all players. Both hotels and OTAs need to agree on matching rules when registering OTAs.
At times, this level playing field makes it difficult for new players to compete in this fierce competition, and they drown them before spreading their wings.
How should hotels look at Rate Parity?
The practice of rate matching was created to protect hotels from OTA interests by reducing their website rates and reducing TAOs.
Why do hotels rely heavily on OTA?
OTA offers a platform for any hotel to book online from the world of booking. They do not have to spend heavy on the market, they need to negotiate better deals with the right TAOs and are prepared to make revenue. Hotels can easily have OTA commissions on their marketing costs, but with a higher success rate. For this reason, the advantages that TAOs offer to hotels cancel out the price matchability of hotels.
What are the challenges of rate match for budding and small hotels?
In small and new hotels, only one reservation is crucial. Already by thin margins paying hard commissions to OTAs is very difficult for hotels. Live bookings here can prove to be a game changer. However, receiving direct bookings can be uphill without any promotional campaign and price manipulation. OTAs often ask hotels to keep the loop, when they do promotional campaigns or price discounts on their websites. To avoid breaking the Rate Match clause, sometimes small hotels exclude the entire room category from OTA and sell them on their website at their own prices.
Competing with OTA prices is difficult for small hotels because the prices below the OTAs are lowered by reducing their commissions. We are not living in a perfect world!
This requires hotels to control the prices of several OTAs to keep their prices competitive. With a PMS system for hotels that are not directly linked to OTA channels through a channel manager, fee parity is even more difficult to manage. Then, hosts have to log into many systems to update their rates. However, it is much easier and faster if the hotel uses hotel technology tools to handle all this.
Few think that small hotels in this situation are stuck between rocks and hard places because, on the one hand, they do not have the marketing budget to reach TAO’s reach. On the other hand, it is difficult for OTA to pay a high fat commission. In addition, TAOs bring business. This is why hotels want to direct more direct bookings. However, this course requires more dollars to spend on marketing. They are in this damn circle.
Here are some tactics that hotels can use to address the challenges of a fee
Creating bundles of packages
Hotels can increase their offer by keeping the price of TAO the same: free parking, Wi-Fi, wine tasting sessions, complimentary breakfasts, sightseeing, free pickup, etc. This practice can have a clear advantage. More than OTAs without breaking the rules of price matching, as the hotel offers a better deal than OTAs.
Lower your rates to a limited audience.
Hotels can lower prices for age groups, category, Close User Group (CUG) or mobile application users. Run email promotional offers for CUG members or mobile app reservations. This can help them make direct bookings on their website and mobile application without violating the fee clause.
Loyalty program and customer commitment
Another way to boost direct bookings is loyalty programs. Loyalty programs offer many benefits in addition to saving OTA commissions. Getting a repeat from a loyal customer is cheaper than getting a new customer. In addition, hotels are better aware of their options and preferences. This spreads a positive word of mouth for the brand and opens the way for more direct bookings.
Use Meta search engines
Meta Search engines like TripAdvisor and Trivago can be considered a small hotel exception. Small hotels may also appear on the TripConnect list, which works on a PPC model unlike commissions for TAOs. Metasearc engines are quite popular among consumers, comparing different properties, allowing them to choose the cheapest channel for booking the hotel. Consumers often see them go for live books, as the difference is not large, because direct bookings are considered reliable.
Website used and booking process
They need to secure the necessary infrastructure to support live booking hosts, thus encouraging and encouraging live bookings. A comprehensive, user-friendly website that provides all the information you need for a clean interface, without having to search. Additionally, hosts need to make sure the booking process is easy rather than cumbersome so that they will not be delayed in the future. OTAs have a huge advantage in this department, but hotels do not have the opportunity to match their online infrastructure with OTAs.
Beyond the discussion, we can accept that Rate Parity agreements can refund direct hotel bookings; there are many factors that prove that OTA hotels are good partners. Hotels can adopt a variety of bypass strategies to mitigate the challenges of rate parity and enjoy multiple OTA reservations at the same time.