The 4 Essential Hotel Parities – Rates, Content, Rooms & Market

Hotel Parity

Consult 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;

Rate Parity

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.

Content Parity

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;

Content Parity HotelThe 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.

Room Parity

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.

Market Parity

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.

Sam Weston is an experienced hotel marketing professional who has worked both client and agency side. Currently, he is a Senior Account Manager for Edinburgh based agency, Occupancy Marketing, a specialist Internet marketing consultancy for the hotel, tourism and travel industries.
  • Dorian Harris

    Consult a lawyer or an economist and you’ll find that parity is defined with words like ‘anti’ and ‘competitive’.

    This has to be one of the most unhelpful articles on direct marketing in years. Hoteliers should avoid parity at all costs. It takes away their competitive edge.

  • Hotel Speak

    Sorry you feel that way Dorian, but appreciate your feedback.

    Surely by not addressing parity (being more expensive, not as accurate etc. as OTAs or other 3rd party channels) makes it a) it’s more challenging for hoteliers to compete for direct bookings and b) harder for consumers to compare a hotels direct website versus other channels?

    • Dorian Harris

      If hotels don’t maintain parity with OTAs they have advantages in every area. They can sell cheaper, if they choose, and they can offer more flexible conditions or additional services.

      The last thing hotels should be doing is putting the message out there ‘it makes no odds whether you buy from us or the OTAs’. That plays right into the hands of the OTAs .

      • Hotel Speak

        As I’m sure you’re aware, OTAs will often demand parity on rate (making it difficult for hotels to sell cheaper). Very true that they can offer ‘added value’ incentives to book though.

        Perhaps the article’s objective could have been clearer – it’s really intended at hotels that don’t observe parity at all (and are therefore potentially missing out on direct bookings by being undercut etc.).

        Those that are able to not just match, but beat OTAs and other channels are obviously in the driving seat when it comes to getting direct business. ‘Book Direct Guarantees’ etc are obviously the ideal, but in the first instance ensuring a consistency is still important in my opinion.

        • Dorian Harris

          I’m still confused as to where you think this will end up Sam.

          Do you think if there was total parity across the market more customers would book direct with hotels?

          • Hotel Speak

            Simply, I think it’s safe to say that if a hotel website has a more expensive rate, different room types (in name), different room descriptions and is considerably more expensive than it’s competitor set then it will be more challenging for them to convert direct business.

          • Gavin Percy

            Putting in my 10p’s worth…. Basically hotels have two choices – join the game or stay out of it. Thinking about insurance – Direct Line make a big thing of not being on comparison sites. They have the brand power and advertising budget to do that.

            Not being on the OTA’s will be a HUGE gamble for most hotels/hotel groups and it would be great to see a Hilton; Accor or IHG trying and spending some of the money they would have paid in commission to advertise the direct booking channel.

            In reality I cannot see it happening as we don’t have the “balls” in the industry.

            If we don’t get out of the game then we have to play by the rules. Sam’s article takes that to the “perfect” end game. But it does serve to highlight that parity should mean parity.

            This is not anti competitive because we are not forming a cartel just making sure that our rates (etc) are all even across all channels.

            At present there is a tendency for hotels to find loopholes by offering different room types, packages or T&C’s via the OTA’s and hoping they don’t notice!

            Basically the situation is that the tail is wagging the dog but it has always been thus since the early days of the HBA’s like Expotel.

            Can we take control back? I doubt it but if we can it would have to be a very strong market and we would have to have some of the big boys taking a stand.

          • Hotel Speak

            Thanks Gavin.

            I believe Hilton actually tried to withdraw from 3rd parties in the past (I recall discussing it during my time at Apex) but they back-tracked quite quickly from what I heard (this could all be rumour and conjecture) after a drop in sales.

            As you say, a massive challenge to take control back. It would be an improved situation if there was some unity and everyone (hoteliers and 3rd parties) played by the rules, but alas, it’s business.

  • rajeshrajans

    Some good suggestions. The reality is that a lot of people (myself included) start their shopping process from an OTA or a Meta search engine. The idea should be to give this person all the information required to make a decision. So when they visit your website, due to billboard effect, they already have a really good idea about the hotel. Also, the hotel website should match or be better than a OTA’s online experience. This is where I see most of the conversions lost. It is either the website or the booking engine that is not optimized for conversions.I like the last point too. There have been studies which show that if everything is equal then people differentiate based on price and they choose the lowest price option.

    • Hotel Speak

      Great points Rajesh.

      OTAs / Third parties are experts at allowing that quick and easy ‘comparison’. I guess it comes back to some of the basics of behavioural economics; providing reference points and comparison tools enable visitors to make a qualified purchasing decision.

      I believe parity should serve as an enabler for that choice between direct website and 3rd party. Like you say, the wise hotelier will try and ‘go one better’ and will likely win the business because of it.

      • rajeshrajans

        You are right OTAs (Especially are experts and spend a lot of money on conversion optimization.
        If you are into behavioural economics you will like Dan Arielys work, you may already know about him. One of his books is called Predictably Irrational. Good stuff.

        • Hotel Speak

          Love Dan Ariely’s work and have read Predictably Irrational – lots of great sales/conversions pointers in there!