A warning you can’t afford to ignore…
This week I cannot take the credit for the inspiration behind this blog. In fact, the subject matter came from a hotelier who called me and asked me to write something that the industry could read and that might filter out as a warning to us all.
So here is the thing… most of us use Tour Operators and have nett agreed rates with them. These are often for FIT contracts that offer heavily discounted rates that are then supposed to be confidential and ‘opaqued’, and by that I mean only added to a package with flights/boat travel/coach tour or even car hire. These rates are heavily discounted for that very purpose. It means that as hoteliers we can fill need dates in our properties without de-valuing our brand and most importantly that these rates are NEVER, EVER exposed to the public.
But what if I told you that exactly that was happening – and not just occasionally – but regularly! I have had multiple instances with Tour Operators distributing your nett rates to the OTA’s, perhaps with them in turn adding on a little mark-up, but honestly not much. So the example that brought this back to my mind (as I thought that the problem was sorted) is that the particular hotel in question found that their rates were being sold nett on LastMinute.com. They received a booking for a stay over the Christmas holidays from LastMinute.com that was clearly a nett rate given to a Tour Operator and better still, on the confirmation from LastMinute.com, the Tour Operators name was given as the booking source.
As part of many of these FIT contracts, we often fail to check the small print which all too often gives the Tour Operator the choice to distribute our rates to third parties. Their sales pitch of course is that they will be packaged up, sold through Operator type sites and of course we often agree thinking that this will help us gain new business in markets we cannot easily reach.
However what this is doing, is allowing certain operators to distribute to OTA’s at a nett rate and then to ensure that OTA’s such as LastMinute.com (as one example) are displaying the very best rates to their customers i.e. the general public – often at a much lower rate than we are able to offer direct.
This practice has to stop and I urge you to check all of your contracting. Make sure that your reservations team are aware and highlight any nett bookings that come to you from an OTA. They should be fairly easy to spot given the heavily discounted rate. Then confront the Tour Operator in question and insist that your rates are never exposed to the OTA’s.
As an industry we struggle enough with rate parity, availability parity and that OTA’s are allowed to use your IP (your brand name) to bid against you on Google rankings, but is this something we should put up with? No!
The hotel in question by the way, had spotted this same issue almost a year ago with the same operator and had confronted them at that time, to be assured it wouldn’t happen again – seems like it has. So my point is, that if you have already addressed this problem please don’t assume it has gone away. Please keep a check on every reservation that comes into your hotel through an OTA. Rate check them and don’t be afraid to challenge any Operator who isn’t working in your best interest. Remember, they are there to facilitate a need in your business, not the other way around.
Best of luck!