July 17, 2013

As rate-parity comes under fire, hotel marketers should prepare for plan B


A number of experts in the hotel distribution field view the rate-parity issue as a contentious one and stongly suggest that hotels and third-party distribution partners should be preparing a plan B in the event rate parity is deemed price fixing.

Because both sides, hotels and OTAs, have found ways around rate parity - such as “fenced” deals offered only to a select audience (last-minute, mobile only, loyalty members, app subscribers) - many argue true rate parity doesn’t even exist.

Cindy Estis Green, CEO of Kalibri Labs, said rate parity is difficult to implement consistently for many reasons, in spite of contracts that require it. Green said the practice may evolve into a condition that is less rigid and defined between hotels and vendors.

“The reality is that we aren't even close to full parity; if rates were all in parity, there would be much less of a need for metasearch and they are the vendors in high-growth mode,” she said. “Of course, consumers use metasearch for more than price searching, but it is still a good portion of the user base.”

Hotels should employ a sophisticated channel-management strategy where they can effectively evaluate offering OTAs less inventory. However, that comes with a tradeoff between more favorable terms or more favorable placement on the site. Hotels that find themselves in a position where a specific OTA represents a significant proportion of their business need to decide whether they can afford lower placement while they also look to diversify their sources of business. It's always a bad idea to depend too heavily on any one source.

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