Consult Dictionary.com and you’ll find that parity is defined with words like ‘equality’ and ‘equivalence’. Ask a hotel professional what ‘parity’ means to them and they’ll probably sigh and recount the difficulties of maintaining rate parity in an increasingly challenging online marketspace.
But what if you were to ask guests what they think parity means? Do they care about our challenges? Or will they book the cheapest or most accurately described room? Will it really matter to them whether that’s a hotel’s own website or an OTA?
We know that maintaining rate parity is one of the biggest challenges in the online distribution of hotel inventory, but what we often overlook are the other parities that can influence your chances of increasing direct bookings.
Here we look at 4 essential parities, Rate, Content, Room and Market;
You have to sympathise with revenue managers (or those who set your rate strategy) – the list of rate parity woes is ever-growing; corporate rates are being offered to consumers, VAT isn’t being included on pricing, inclusions (breakfast etc) not being made clear, non-transparent pricing (per person vs. per room), lack of clarity of rate types on offer, mixed messaging on cancellation policies etc.
And in an online environment where affiliates of affiliates seem to be popping up here, there and everywhere; the emerging challenge is finding the source of a cheaper rate.
However, rate parity remains essential. Price driven consumers will shop around and book the cheapest rate they see. If that’s an OTA, then you’ve just lost up to 25% of your profits.
We should take learnings from a recent article by David Collins on the future of hotel brands;
“Remember, ultimately you dictate your hotel’s rate strategy and decide which 3rd party channels including GDS suit your business mix”
Whilst the situation may seem helpless for many, it is our collective responsibility to continuously challenge and raise awareness of distribution channels that don’t adhere to fair business practice in order to instigate long-term change.
It seems a simple premise – have the same room types, with the same room descriptions, wherever your hotel is mentioned across the web. In reality, it’s surprisingly overlooked.
The naming of room types is often different across channels (e.g a Double Room on a hotel website might be called an Executive Room on an OTA – exactly the same inventory but a completely different name). Keeping a consistency across room types and room descriptions ensures a level playing field between your website and OTAs.
Example - a popular hotel in New York.
Full credit to the hotel for having a cheaper rate than the OTA for a random availability check. However, their description of a King Room differs between the OTA site and their own website/booking engine;
The website talks of Italian Frette Linens, luxury toiletries, animal print bathrobes etc. It’s absolutely understandable that they highlight unique selling points, however, when it’s compared to the very factual and comprehensive room description featured on the OTA website, you can see there are key elements that are missing.
There is no mention of air conditioning, iron, hairdryer, PPV channels, alarm clock and wake-up service on the hotel website room description. Whilst this may sound petty, would a guest feel more confident in booking through the OTA because its room description features one key element they particularly wanted?
Having content parity isn’t going to radically transform your direct booking production overnight, but it may mean a few extra room nights a week. Collectively, that can make quite a difference to your room profitability.
Are you consistent with the room types that you offer across all channels? OTAs and other channels may demand that you feature every room type available within your hotel through their websites, but oddly, hoteliers don’t operate by the same principle. Hotel Speak has known hoteliers who offer their least popular rooms through OTAs but not on their own website.
For example, some hotels have offered rooms with limited daylight, limited size, increase noise levels etc. to OTAs at a cheaper rate and not retained availability to sell them through their own website. Whilst this may be understandable from a branding perspective (a desire to have your best room inventory available through your own website) it could well cause confusion amongst your guests. Why does an OTA have a room for sale that the hotel doesn’t even mention? Beyond that confusion, you’ll always struggle to feature the cheapest rates if you always have availability of these ‘inferior’ rooms through OTAs.
Ensure consistency by featuring all your room types on all channels.
Ideal world scenario – you’ve resolved all rate parity issues and feature the cheapest rates on your website directly and room descriptions and room types are consistent across all channels. However, your hotel is still struggling with occupancy whilst those around you always seem busy. Why?
The final parity, market parity, is perhaps the most important of all. You will always struggle to sell rooms if your like-for-like competitors are consistently cheaper.
Compile a competitor set of hotels that compete with you on service quality (star rating etc.) and location and monitor their rate strategy. There are obviously many paid for tools that will automate this for you, but even the manual process of spot checks at the start of every week or month has considerable value. Keeping a handle on what your competitors are doing and ensuring you have market parity in the rates that you offer is vital for your hotel to succeed.