Many people don’t understand rate parity and we have seen revenue managers making this tool their core value. It is not important to have it in every distribution channel as many online publications say. To start with the definition, it is simply a tool in the Revenue Management lexicon that shows up in two concepts, OTA contract provision and strategy pricing principle.
The first strategic pricing concept states that your customers will pay consistent price no matter where they decide to shop for your hotel. This is actually a good idea if you don’t want to differentiate your offering using different channels. This will also add your rate integrity, help you in competitor price monitoring, and in the long run, it will support your brand. It doesn’t make sense if you give more priority to a particular channel and train the customers to go to your hotels because of the low rates. Here is what you need to consider:
· The rate of the room is just one of the tools you can use to attract your customers. Competitor price watch is also essential. You can have different pricing strategies and structures depending on your room and hotel services and products. Don’t use it because everyone else says it’s important or everyone else has it.
· Whether you choose to use this tool or not depends on your distribution channel strategy. It is important that you reward strong channels with a rate advantage. If you get more guests for your hotels form a CVB website, you may want to give them an offer but charge other sites highly.
The second strategy is concerned with your contracts with online travel agents (OTA). These OTA’s help with marketing your hotel to their customers and in return, they will make certain demands, one of them being that you offer them rate parity. Although these sounds like a good deal, the reality is that it can get complicated. Here is what you need to consider:
· The revenue managing tool only applies to a particular hotel room at a particular time and the rates change constantly. Rates go out of parity for certain periods of time because of human errors and lag time. You can tell when rates are out or parity by using rate shopping tools.
· It applies to all public rates that do not have any special qualifications such as limited audience rates or affinity rates. Many shoppers use OTA’s website when looking for the best hotels and then, they visit the hotel sites to book their stay. That’s the main reason why OTA want parity with your hotel site. You can captures shoppers when they hit your hotel website by including a super add on package.
Rate parity is very important to anyone who owns property. You need the tool to do business with different distribution channels and it is also important in price monitoring. And as noted earlier on, use rate parity because you think its right and not because someone else asked you to.
The first strategic pricing concept states that your customers will pay consistent price no matter where they decide to shop for your hotel. This is actually a good idea if you don’t want to differentiate your offering using different channels. This will also add your rate integrity, help you in competitor price monitoring, and in the long run, it will support your brand. It doesn’t make sense if you give more priority to a particular channel and train the customers to go to your hotels because of the low rates. Here is what you need to consider:
· The rate of the room is just one of the tools you can use to attract your customers. Competitor price watch is also essential. You can have different pricing strategies and structures depending on your room and hotel services and products. Don’t use it because everyone else says it’s important or everyone else has it.
· Whether you choose to use this tool or not depends on your distribution channel strategy. It is important that you reward strong channels with a rate advantage. If you get more guests for your hotels form a CVB website, you may want to give them an offer but charge other sites highly.
The second strategy is concerned with your contracts with online travel agents (OTA). These OTA’s help with marketing your hotel to their customers and in return, they will make certain demands, one of them being that you offer them rate parity. Although these sounds like a good deal, the reality is that it can get complicated. Here is what you need to consider:
· The revenue managing tool only applies to a particular hotel room at a particular time and the rates change constantly. Rates go out of parity for certain periods of time because of human errors and lag time. You can tell when rates are out or parity by using rate shopping tools.
· It applies to all public rates that do not have any special qualifications such as limited audience rates or affinity rates. Many shoppers use OTA’s website when looking for the best hotels and then, they visit the hotel sites to book their stay. That’s the main reason why OTA want parity with your hotel site. You can captures shoppers when they hit your hotel website by including a super add on package.
Rate parity is very important to anyone who owns property. You need the tool to do business with different distribution channels and it is also important in price monitoring. And as noted earlier on, use rate parity because you think its right and not because someone else asked you to.
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