This has become quite a volatile topic throughout 2019, which we now call OTA Price Quality Wars.
So, it begs the question.
Firstly, just want to state that we have always advised and recommended that you should be practicing rate parity. But the idea is that what rate you offer on your website you should mirror on all OTA channels, so no matter where the booker looks, they see the same rates being offered and it builds trust in the market.
Sure there is a temptation to recoup some of the commissions being paid to OTA’s by adding a premium to rates, but the simple fact has been that rate parity works. Even companies such as Triptease who are direct booking advocates, profess that by practising rate parity, Hotels can expect to see an increase in overall bookings by up to 30%.
However, there has for some time been a number of, what we’d call, ‘rogue’ websites who find a way to undercut your public rates and therefore disrupts this rate parity approach. So, this is not a new problem and has been going on for some time.
You see, for years the OTA’s have demanded (contractually even) that you offer rate parity, meaning you must offer your best available rate to them at all times.
They request and even demand rate parity.
So when an OTA decides to break ranks and undercut the other OTA’s, it becomes somewhat hypocritical.
In recent months the big boys have now joined the party. Meaning the duopoly of Booking.com(Priceline) and Expedia have found a way to “justify” undercutting each other. When I say ‘justify’ I mean they have found loopholes in contracts and gone out and made it public that they now reserve the right to undercut the public rate that you are giving to them.
What was that I said? They are changing the price of your room without your consent, would be a more straight forward statement.
How have they done this?
So who cares if they want to eat into their own commission right? Wrong!
We, as hoteliers can get stuck in the middle. Someone undercuts, so Expedia lowers your ‘price quality score’ and so decide to undercut the already undercut rate, then BDC follows suit, offering their prepayment benefit. And round and round it can go.
Because of these actions, you may now want to begin to offer a better rate on your own website, especially if you are a smaller player as you are unlikely to get shopped very often by an OTA, and it would be great to attract some more direct bookings. Because of the fact that we know around 50% of bookers who visit an OTA will visit your website to check for the best deal. It is here where we can take some ground.