This Hotel New Now article discusses rate parity for hotels and its effect on the industry.
PUBLISHED BY: David Kong, Hotel News Now Columnist
PUBLISHED DATE: January, 2016
Online travel agencies surged into power after 9/11. As they gained control and influence in the early 2000s, they began to offer lower rates than hotels.
For example, a hotel might have a best available rate of $100 and give an OTA a 15% commission. The OTA then offers a $90 rate on its website to undercut the hotel and still makes a nice profit. The industry wised up quickly and began asking for rate parity where the OTAs were not allowed to undersell the hotels and vice versa.
This is not a unique approach. Many prominent brands have price-parity requirements across their distribution channels. Rate parity gives consumers reassurance that they have the best available rate regardless of their preferred channel.
For hoteliers, it was a good strategy to entice bookings through their channels and avoid commissions because they can guarantee the “best available rate” through their channels. For OTAs, they get the reassurance that hoteliers won’t undersell them and they can likewise market the best available rate. It seems like a win-win arrangement. Rate parity ultimately allows hoteliers to streamline how they manage inventory across multiple distribution channels for the benefit of hotels and consumers.
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