There was a current conversation on LinkedIn about the requirement for preserving rate parity in hospitality and its ramifications.
Just to clarify for the non-revenue management folks here, Rate Parity generally suggests preserving the verysame openly offered rate for the verysame space/same stay throughout all public circulation channels i.e. channels offered to any member of the public that is not a commitment member or member of some visitor gratitude or benefit program.
Rate Parity is not a brand-new online policy particularly developed for the OTAs. It existed long before the “commercial web” came into being and there was just one factor for its presence: it made earnings management and management of circulation channels much mucheasier. All significant hotel chains and wise hoteliers used rate parity throughout all offline circulation channels: voice, walk-ins, GDS/brick-and-mortar travel representatives, etc. With the development of the online channel, this company policy was used to the hotel site and the OTAs as well.
Rate parity in the OTA – hotel relationship suggests the OTAs have gainaccessto to any openly offered rate a hotel may have. Rate parity does not prevent hotels or OTAs to deal lower rates to their commitment or benefit program members such as Marriott BonVoy or Expedia One or Booking Genius members.
Some hoteliers argue that without rate parity the market would be muchbetter off duetothefactthat hoteliers would be able to sell at whatever rates they desire, unencumbered by the OTA rate parity limitations. No rate parity, in theory, provides the right to release decreases ranks on the hotel site.
In other words, the abolishment of rate parity would be a excellent thing for the market. Unfortunately I discovered these arguments rather ignorant particularly coming from hoteliers who regularly underinvest in the direct online channel, in their digital marketing and innovation.
Just picture if rate parity amazingly vanishes and now the hotel has the right to market and sell whatever rates they desire? Let’s state the residentialorcommercialproperty comes up with a 20% off promo on the residentialorcommercialproperty site. Whom are they going to sell this promo to? And how are they going to promote and sell such a “below OTA rate” if their digital marketing efforts are seriously underfunded and their “digital marketing home” is not in order?
Who will even notification such a promo if their home site is a tired and outdated 5-year old mobile-unfriendly site with