Beyond Rate Parity – Why Transparency Still Matters?

2017 was a watershed year for rate parity. While several countries in Europe have put restrictions on the Rate Parity clause, the issue has been under the microscope in North America and Asia Pacific.

A world without ‘Rate Parity’

For years, the hotel industry has been under the impression that rate parity is the root-cause for everything that has gone wrong with pricing. Rate parity being the key factor in the pricing strategy of most hotels, there has not been major differences in published retail rates. It’s time for a reality check.
Yes, the hotels, especially the independent properties would be in a better position to manipulate rates. But does that ensure better rates and higher revenues? As a consumer, you might not mind paying extra for the experience of shopping in a luxurious mall. But would it be the same if you are purchasing online? How could one justify different prices between one website to another for the same product?
Consumers more than ever want to be on top of the whole distribution chain and drive hotel pricing decisions through the power of web. With their smartphones acting as the facilitator, today’s consumers are more demanding, more informed and more empowered.
Retail rate parity has been instrumental in hotel rate transparency resulting in improving consumers’ trust. And at a time of ‘super-empowered’ consumers as Google calls them, trust matters.

Rate Transparency – where it stands now

According to Expedia Media Solutions and comScore, Americans made 140 visits to travel sites, 30% of them on OTAs, during the 45-day period prior to online travel booking. Further, a 2017 study by Cornell also reaffirms that far from being dead, billboard effect is still very much alive. Hotel guests have now learned to shop for deals on OTAs. With the brand loyalty getting diluted with the average guest age going lower, clearly hotel booking has become more complex than ever.
With each channel having its rule, segment, buying behaviour and platform, managing rate and availability in real-time to these channels can become a nightmare.  Gone are the days when hotels would depend on historical data for rate forecasting – today’s revenue managers need to factor in consumer’s buying behaviour, search pattern and preferences for right pricing. For hotels, understanding the market place and guest purchasing behaviour have become crucial to implementing a balanced pricing strategy.

Rate Strategy – Now and Then

For long, hotel rate intelligence prioritized parity across sites. Pricing data has traditionally been used by hotels to view the marketplace, monitor competitors, benchmark products and be positioned accurately to optimise yield and revenue.
It’s time for hotels to refine their pricing strategy symbiotic to business intelligence data. As the consumer purchasing behaviour takes a definite shift towards experience with value, it has become crucial for hotels to add travel-related search and booking patterns to understand the guest at every possible level.
With increased customer knowledge, hotels now have the opportunity to expand their product offerings based on preferences.  Hotels need to evaluate each channel for the opportunities they present, and be creative with product differentiations – all the while staying transparent – for optimizing rate and revenue. Revenue management is all about selling the right product to the right person at the right channel at the right time.

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