How to implement Rate Parity
July 29, 2005
As an hotelier over the last 5 years you have just gone through the experience
of 3rd part websites and distributors asking you for the best rate, and now they
are all of a sudden asking for rate parity. You might ask yourself why.
Distributors of your rooms have got very large budgets for marketing, more then
most hotel chains. They will spend this money in attracting consumers to their
website, where after these investments convert into marketing for hotels. All
these third party distributors are very aware of the fact that their consumers
are always shopping around. The average consumer actually checks at least two
websites before making a decision on where to book their hotel room. Naturally a
consumer will go to the site where he will find the best rate for the hotel that
he’s shopping for. These 3rd party websites and distributors just do not want to
waist money on their marketing efforts offering uncompetitive rates.
This is where your relationship with your providers comes in place. Keep in mind
that with all the marketing money they are spending, they have thousands, often
millions of unique customers. It’s only understandable they are asking for
competitive prices in the form of rate parity. To understand their possible
reactions, just ask yourself whether you would promote a product that is
available in the store next door at a better price. So if you are not offering a
competitive price, which is only too easy to find out, a reaction will
undoubtedly follow, possibly resulting in them pushing your hotel sales less
hard.
This leads to an assumption that rate parity will really help to strategically
build relationships with your distributors. All your partners get access to the
same sell rates, and have equal chances in being successful in their marketing
efforts.
Should you come to the decision to run a rate parity strategy, the next step may
be even more difficult, implementing rate parity into your operations.
Calculating and loading all commissionable and net rates that you give out on a
daily basis, keeping in mind tax inclusion and tax exclusion rules of the
extranets, can take you up to 4 hours a day. Now imagine the work you have to do
every time you make a single rate change.
The answer for this challenge is Rate Tiger Allocator, the extranet of
extranets. This platform interfaces with over 100 3rd party portals and allows
you to simultaneously update rates and availability from one screen, making
implementing rate parity a piece of cake.
Related Link: RateTiger
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