posted by: While browsing last week’s industry news I came across this trend report published by Rate Gain showing rate parity patterns observed for hotels in major European cities. It is surprising to see hotels not offering parity even with the vast tools and resources available to revenue managers today. This picture perhaps confirms that the economy is still in distress and hotels are turning to the online travel agencies (OTAs) to drive occupancy. Is this the wrong move?
*Images show Rate Parity trends from Oct-Dec 2011 for 4-star (top image) and 5 star (bottom image) hotels in seven cities.
Without a doubt, OTA’s play a key role in bringing customers to hotels – they have greater marketing capabilities, especially when compared to a small group or independent hotel. When I consult hotel revenue managers on their strategies, I often advise a direct to property strategy which engages OTAs but ultimately seeks to drive bookings to their own channels. To do this, Rate Parity is very important. What message does it send to the “research savvy” consumer if they shop your hotel online and then compare the prices found to your own site, only to find that you are charging more?
Build consumer confidence in your own/brand booking channel and integrity by aligning the rates offered. Consumers will book whichever way they are comfortable with or wherever they have found the best rate, but give them a fair choice in making that decision and one that does not drive them away from your own channels due to better value for money elsewhere. The use of channel management tools or direct connects via a CRS will make this process seamless: offer the same price – same terms – all channels.
Be strategic: know your customer
What is strategy all about? A strategy is how you plan to get the right customer to your hotel. Your assessment of the demand, your product, your service and your market position should have lead you to distribute the right price already. Once that customer gets to you, whether to your website or that of one of your partners – the right products aligned to their needs and interests should be there – your value proposition. Discounting should not be necessary and is not a strategy. The only result of discounting is erosion of ADR and brand.
If you are tired of always discounting, it may be time to look at your strategy for 2012 and start integrating more tools, channel-specific media and promotional opportunities, and online marketing services to help steer your business back into your hands.
Paul King (paul.king@sabre .com) is a Revenue Management consultant for Sabre Hospitality Solutions, working closely with EMEA customers to create and improve their rate and pricing strategy. Paul works on Sabre Hospitality’s global solutions consulting team whose goal is to help hotels grow their businesses by leveraging internet marketing, revenue management and distribution resources available to them.
Comments
Hi Paul, good article, but it needs another dimension; FIT wholesalers. In my personal experience, rate parity breaches usually ends up in some FIT allotment given at extreme discounts for closed sales purposes. Rates and rooms wholesalers deem essentail for them to survive in todays market, and unfortunatly, a message hoteliers have a nasty habit of listening to. Traditional OTA's are usually connectable in some form and hence easier to controll, given rate parity and not inventory parity. Wholesaler either do not connect at all, or demands static rate allotments in addition to a dynamic connected model, by the way on much higher mark downs than traditional OTA's. Unless hoteliers start demanding control over their own inventory and rate strategy, from all distribution partners, we won't even get off the start block. No distributor, intermediate, wholesaler or OTA is nothing without a room to sell, our rooms to sell.
actually the problem begins when a big ota offers specific discount for that particular market, example expedia if you dont take that chance,the customers will browse and eventually buy nights at hotels in similar conditions which are giving the best % of discount. also for the OTAS that are not in channel connect is veen more complicated to have them in parity when you dont have the appopiatte tools to change the BAR on "time" working with more that 8 extranets I find it difficult. Best Regards Patricia