Rate Parity, Much Ado for Nothing?
Over the past few months, there has been a lot of talk about the imminent “end of hotel rate parity” and what it means for the hotel industry.
Reality is that rate parity agreements put in place by OTA’s were never fully implemented by independent hotels. The complex distribution structure of an independent hotel operating in the real world made it impossible. Rate parity is just not that easy to implement and control.
Smart asset owners and managers devoted very little time to this clause in their OTA contract. Instead they focused on getting the most out of the OTA’s and building their direct revenue.
On the opposite end of the spectrum were people who ran around in circles worrying about maintaining parity like it was life and death.
Rate parity has never once been a factor that kept hotels from reaching their revenue goals.
The fact remains that if you still have not convinced your guests that your own website is the best place to book, it’s a failure of your online marketing and distribution strategy.
The OTA duopoly of Expedia and Priceline has been actively focusing on owning the travel cycle.
To think of rate parity as the pillar on which the OTA’s have built their revenue and profitability is flawed.
The key to their success is their unflagging commitment to investing online, which is where people are researching, dreaming and shopping travel.
Instead of worrying about parity, extreme channel management tools, and data overload, how about you shift focus to the guest and their travel cycle?
Diversify your efforts and instead of just thinking of them when they are ready to book a room, think of them in different stages of their travel from their home to your hotel.
- Using a Customer Relationship Management Tool
Every hotel today has some sort of a CRM system, but very few actually use it.
Nameless, faceless throwing of room keys at your guests at the front desk has to stop.
Hotels that truly connect with their guests, and provide what their guests crave (information, support, service, appreciation) are the ones who will continue to build profitability.
Even if hotel rate parity were to disappear overnight, thousands of hotel CRM tools would still be collecting dust. Hotel websites would still lack fresh content, and offer guests a substandard booking experience. Your front desk staff would still not recognize loyal guests, and would still fail to encourage them to spend more at your hotel via special dining or activity promotions.
In once sentence: "If you live by the rate, you die by the rate.”