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Rate Parity for Hotels

Rate parity concept

Rate parity is an unavoidable part of doing business in the hotel industry. While it’s not an ideal situation for hotels, it is necessary. Today in the Southeast International Hotel Brokers blog, we’ll talk about what rate parity is, why it matters, and what you can do to reduce its effects.

What is Rate Parity?

When you partner with an online travel agency, you will likely have rate parity as part of your agreement with them. But what does this mean? Rate parity essentially says that you have to have rates for your rooms be consistent across all channels. If you charge $100 for a room on the online travel agency, your website has to have that same rate. This is put in place to prevent hotels from undercutting the OTAs they sign agreements with.

Why it Matters

While dealing with online travel agencies gives you more exposure, it also comes at a cost. Since you have to agree to rate parity, you’ll probably see a reduced number of direct bookings. Obviously, direct bookings are preferable because you don’t have to give a cut to the online travel agency. However, there are some ways you can combat the effects of rate parity and increase your direct bookings.

Offer Perks and Incentives

Although you can’t undercut online travel agency prices, you can offer certain perks through direct booking that they can’t. Plus, loyal guests should be able to get more reward points if they direct book with you, which is another incentive.

Use Your Marketing Avenues

You can also use your email lists and social media presence to encourage direct booking. If a guest receives an email from you about booking their next stay, they might be more likely to just click on that rather than go through the process of using an online travel agency.

Streamline Your Website

Of course, no one wants to go through the direct booking process if it’s clunky and difficult. Online travel agencies typically don’t have the cleanest interfaces, so if you have an extremely easy-to-use booking system, people might be more likely to direct book through your website.

Choose Southeast International Hotel Brokers

If you’re in the market for a hotel, or if you’re looking to sell your hotel, Southeast International Hotel Brokers can help. Our expert team of hospitality brokers has years of expertise and access to vast resources to help make the buying and selling process that much easier. Contact us today for more information and to speak with a member of our hospitality broker team.