Price Accuracy Vs. Rate Parity Price accuracy and rate parity are two of the most important factors...
What Is Disparity Monitoring & Why Your Hotel Metasearch Needs It
Hotel metasearch can help prepare your hotel for a world without 3rd party cookies. The Metadesk insights team explains how.
Ensuring your hotel is in parity is an on-going struggle for many in the industry. In a previous blog post, we talked to some experts in the field about their parity challenges and best practices. We took what we learned from them and are putting it to good use at Metadesk. Read on for exciting developments in the parity battle.
What is rate parity in the hotel industry?
Rate parity is an agreement between hotels and their partner OTAs that ensures consistent pricing across distribution channels. In exchange for increased visibility on OTAs, it’s often written into these agreements that the hotel will not undercut the prices offered by OTAs. This includes alerting partner OTAs when the hotel is running sales and offering discounts so they can do the same. From the customer’s perspective, this means they should see the same price whether searching on an OTA or directly through your booking engine. If the rate listed by your hotel differs from the price listed by OTAs, then your hotel is said to be out of parity.
What are the risks of being out of parity?
When customers see conflicting prices, they’re often left feeling confused, unsure of who to trust, and skeptical that they’re getting the best deal. It creates a muddied and frustrating user experience, which can impact bookings and hurt your brand’s reputation. They are also more likely to book with whichever channel has the lowest rates. Meaning if OTAs are offering a lower rate, you’ll lose out on valuable direct bookings.
How do hotels fall out of parity?
In theory, customers should see the same price across the board, wherever and whenever they search. However, due to technical errors and questionable business practices, this is not the case. A common way hotels fall out of parity is due to software delays. Sometimes there’s a lag between when the hotel informs the OTA of a price change and when the change is implemented by the OTAs software. This results in inaccurate prices in the distribution channel. Additionally, OTAs tend to take a loose approach to their own rules. They often stack discounts or decrease the amount of commission they earn from a booking in order to display lower prices themselves, effectively undercutting the hotel.
How can we ensure we stay in parity?
Depending on the service you use to oversee your metasearch campaigns, you’ll likely have to do a lot of manual labor to find whether or not you’re in parity. Some channels, like Google Hotel Ads, offer basic information on “price competitiveness,” but beyond this, specifics are hard to identify. Reporting delays complicate the issue even further and hotels are left playing catch up.