The End of OTA Rate Parity

Anyone who has heard me speak or read past blogs and articles will know that while I steadfastly agree that OTA’s are a necessary evil, I am also incredibly aware of how they do business; how they continually find ways to disadvantage hoteliers and how their under-hand sales tactics are never, ever there to support hoteliers.

But as I have also said repeatedly, a lot of this is our own fault… we did a deal with the devil almost 20 years ago and now live to regret that action every single day…

In this article, I would like to focus on a subject that has caught a lot of attention on our Right Revenue Hoteliers Forum, and that is the question, ‘Do I still need to adhere to rate parity clauses in my OTA contracts?’

The resounding answer to that (from our incredibly vocal and supportive hotels) was absolutely not! OTA’s have been taken to court, and lost, in several different countries over the past few years and it was ruled that hotels had the right to advertise different prices on different channels and that parity clauses were tantamount to price fixing.

So, how did we react to that? With joy, gusto, and enthusiasm of course. We went crazy with ‘Book Direct for the Best Rate’. We added better prices on our website and supplements to OTA rates. We included extra perks like early check-in or free breakfast in our Book Direct pricing. We expected the floodgates to open, and I guess for many hoteliers, it worked. We saw many hotels decrease their reliance on the OTA’s and increase their direct bookings.

All of this is amazing news, and I am incredibly proud that we as an industry used this time to encourage our guests to not only book direct but stay direct.

But did we honestly expect the OTA’s to take this lying down? Of course not. It didn’t take them very long to work out that they needed a new strategy and hence the plague of ‘under-cutting’ began.

If we were no longer bound by rate parity rules, neither were they!

While we celebrated being able to offer the very best rates direct, the OTA’s were working on a plan to use their commission to undercut our pricing and while this may have happened sporadically in the past, this is now part of an OTA’s strategy.

We add supplements to our BAR rates to ensure that the OTA’s are higher and then they immediately use their commission and their buying power to ensure that they have the best rate. Add this to the Genuis Programme (please opt out of that immediately, as trust me Genuis is actually making an idiot out of you!) and we may well be in a worse situation than we were before.

My question is: ‘By keeping rate parity rules would this have stopped the plague that is now under-cutting?’ I guess it is up to you amazing hoteliers to decide… My concern is that we now have almost zero control of our rates; what is publicised and what is available. Whilst there may have been a few culprits in the past and we have all seen unscrupulous OTA’s distributing nett, and contracted rates, now we literally have zero control of our bread-and-butter BAR rates. Is this better or worse?

I guess we watch this space and in my over-used and plagiarised comment from the late, great David Bowie… “the future belongs to those who see it coming…” So, what is next??? Watch this space I guess…

I hope you enjoy the read and as always, for all things revenue, just ask@rightrevenue.co.uk