How can hotel price parity be controlled?


Over the years, ‘Rate Parity’ and ‘Best Rate Guarantee’ have contributed to the commoditization of the hotel product. Considering the fact that there can be several avenues for customers to avail offers related to the “lowest” price, how can hoteliers partner with OTAs to create a value proposition?

From an OTA’s perspective, belives in creating a fair rate environment for customers. “It is something that we share with our hotel partners,” said Rob Rosenstein, COO, Agoda. “There is nothing more frustrating for customers when they find confusing and sometimes fake rates online at sites that are not authorized partners of the hotels. Often customers are enticed to give their credit card data or email address before even being shown the tax and service fees,” added Rosenstein, who is scheduled to speak during EyeforTravel’s Travel Distribution Summit Asia 2009 to be held in Singapore (April 1-2).

“On some sites, customers are encourage to make a booking on a site where that hotel is not even available and then the site tries to switch the customer into another hotel. Even more often, rates that are not meant for online distribution or room-only are being sold online,” Rosenstein said as he shared the realities of the marketplace.

“One of our main focuses is sharing our rate research with our partners so that hotels can be aware of how their rates are being sold online. We work closely with hotels to ensure that our customers receive the best rate and all of the Agoda partners share this mission. The online experience is about saving time, providing easy-to-access information, and booking at a fair price. This experience, even in an environmnet of rate parity, is never a commodity,” he added.

Commenting on profit parity as opposed to price parity, Rosenstein said only by controlling price parity can hotels control and manage yield effectively. If a hotel can ensure that its partners are selling at the same rate, it can negotiate different profit arrangements to suit its occupancy requirements and own needs.

“Some hotels may want to pay more to expand a geographical niche or support a low season. Different OTA’s have different strengths at different times. The most important thing is data and giving the OTA a chance to prove what it can do, so you can evaluate the data,” said Rosenstein.

Considering the current environment, it is also critical to assess to what extent can one compromise on price integrity. “Fortunately, the online channel allows hotels to be very compromising with rate integrity because the rates online are shown for a brief moment to real customers, who tend to book very last minute. Customers know that online rates can change minute to minute, so hotels can afford to be aggressive and dynamic on the online channel,” said Rosenstein. He added: “My advice is to be very aggressive with online rates to see what kind of response you can get and what kind of impact you can get.

“If your hotel is on the first page of, it might be interesting to see what kind of a response you would get with a substantial price reduction. You can even learn more about optimal selling rates. Since you control it in real time, it is valuable data and it is in your control.”

EyeforTravel’s Travel Distribution Summit Asia 2009
Rob Rosenstein, COO, Agoda, is scheduled to speak during ‘Optimised third party distribution to stimulate sales’ session. The session is part of EyeforTravel’s Travel Distribution Summit Asia 2009, to be held in Singapore (April 1-2).

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