Rate issues / Rate parity

Created by Katrín Magnúsdóttir, Modified on Thu, 28 Sep, 2023 at 1:05 PM by Katrín Magnúsdóttir

Wrong rate sold on OTAs, disparity and other price display issues.


Now more than ever has it become obvious that the pricing you set up in your PMS, and send through the channel manager to your OTAs and distributors is not a match to what they sell for publicly.

I will try to list a few reasons for that, possible ideas for solutions, hoping that can help you get the number of discrepancies on minimum. 


Firstly, check that your prices in the Booking Factory and OTA (booking.com, expedia, agoda, etc) calendars match. If the calendars match, then there is nothing technically wrong. Mapping is fine, connections are working properly. 

 

So the price difference can only be set within the channel that is displaying and selling the wrong price. Consider whether you have activated any discounts in the OTA, but did not add in your PMS. You also might have approved in contract that they can add discounts to your rate. 

If you are using Booking Factory´s Booking Engine on your own website, a good idea is to always have the same promotions in the PMS to display on your direct sales channel - you don´t want to miss out on a direct guest if possible.  


 

Let´s start with those "out of nowhere", up to 75% discounts for your prices on an OTA, that you never remember setting up or approving. You don´t spend every day searching, checking random dates on all of your sales channels. You only noticed your price is wrong because you started getting reservations for a ridiculously low price? 

 

In most cases there is 1 reason for that: OTAs would enable a certain feature, with  goal to help you sell better. Then they would send you a notification that the feature is enabled, and you can manually disable it. Or they would not notify you about it in a clear or transparent way.

Considering the past years being really rough for in terms of competition, they might have gone to extremes and activated automatically significant discounts that you need to deactivate on your own. Or ultimately contact their customer support or your marketing/ account manager requesting that the promotion is immediately ended. 

Be well aware of all conditions of your contract, log into your extranet for that OTA and check your promotions, additional features and any other place where secret discounts might have been activated. 

 

Agoda´s recent 75% 24hour sale

Agoda´s other special deal to a random visitor to their website


Then there is another level of promotions, something like membership discounts that the OTAs offer to your guest, their loyal guests. Often under different names in each of the OTAs, but all with the similar way of selling your prices lower than what you set them for public. They belong under Fenced rates, that should not be visible to everyone. 

What´s important to mention here is that, more often than not, those membership deals are actually available to non-members. Signed in or not, it takes 2 seconds to sign up as a member and get to see all discounted prices. 

And do not think that agents are not taking advantage of using those OTA discounts to book their guests´ stays. What will only be 10-ish% cheaper than your regular rate, an agent might be booking a larger number of rooms. All of them get the 10% off. And you pay commission on top of that. Check your numbers there, see if your B2B partners would bring the same final net amount, with the same ADR/ occupancy. Use Reserva or similar marketplaces to distribute to agents, control their rates and cancellation policies.  

So be careful when approving or activating those membership secret special deals "available only to a selected audience". If you still want it activated, make sure that it does not affect your rate parity by being a public rate, and of course, don´t forget to activate the same offer on your own booking engine. Your direct guest is far more important to your business than a guest that will book from a 3rd party, for the discounts they offer on your behalf.  


But make sure not to forget to review regularly the promotions and discounts, increased commissions or loyal-guest discounts you added some time ago. Some of them have done their job, and can now be deactivated. Some might have proven to be quite useful or have shown a potential, and you might want to modify them. Time to log into the OTA´s extranet and check everything you have in your sales tools.  

Never stop trying out different options, but always turn to the results and evaluate your success. 


Another reason for heavily discounted rates being sold online is that you have a leak in your offline or contract rates (wholesalers with no limiting contracts with the hotel, tour operators etc). They often cause a rate parity issue on the OTAs and metasearches. 

Your account/ market manager from Booking.com or Expedia could reach out and say that there is another online channel selling you for a lower price. Or you might be using 3rd party tools that do the parity checks for you and alert you of any parity issues online. In most cases, the names selling you for lower rates are unknown to you. Use all available information and investigate. You don´t want anyone reselling you for lower than what you sell on your own website. It is a lower rate than your direct one stealing a direct guest, affecting your brand image as well as revenues.

 

As an example, you can go to Tripadvisor, Trivago, Google or any other metasearch and check various random dates for your hotel. 

A contracted OTA, such as Booking.com or Expedia, might have slight discrepancies, sometimes due to technical error, and sometime due to currency conversion rate. But the main issue are the little-known, non-contracted OTAs that appear to be offering your price much lower than your own website, or any of the major OTAs. 

 

Make sure to check if the conditions match, that can often be an indicator of a reseller if your conditions are not identical across all distributors. Here is 2 examples of seeing an extended scale of prices, with  sightly different conditions and significantly different prices. 

 

Google, Hotel A

 

 Tripadvisor, Hotel B

This is mostly because those small OTAs, usually appearing out of nowhere - such as Amoma, Zenhotels, Ostrovok or FindHotel, buy your inventory at a wholesale price from one of the resellers, filling their inventory from one of your partners selling other than OTA rates. They still have enough space to add minimum margin on top of the price they bought it for. 

 

And as a consequence, and because they price match as guaranteed in their terms and conditions, when you signed the contract, leading OTAs started reselling those rates too, showing them as your lowest rate, even though you are not sending those rates to their extranet - in this screenshot Expedia (and Hotels.com as a part of their group). 

Often there will be just plain undercutting, where one of the leading OTAs will give up on a part of their commission to be able to offer the lowest price. You will still get the same net rate (considering that OTAs offer to collect the money from the guest, and only forward you the final net amount), but your online selling rate on that channel will be lower than the one you sell on your website. 

 

 

If you are lucky, the photos and content of that channel might give you a hint of where the content is scraped from or who might be the reseller. However, sometimes the only way to figure out where the rate is coming from, and who is reselling it, is by actually being the guest yourself and making the reservation on that rate. Check conditions and final price in the last step before making the reservation, and compare it to your other distributors and the prices they are selling for. 

 

Talk to your wholesalers and make sure they understand that you do not approve them reselling your rooms to untrusted operators that have no obligations or contracts with the hotel. 

Talk to your partners that are getting contract rates, or any offline rates that you signed with them. By understanding where the leak is, you will not end up cutting off all of your distribution.

 


 

Read more about Rate Parity issues and Distribution


And again, to be able to detect where the issue is coming from, best is to start with checking your rates in the PMS, and then compare them to your calendar in the OTA such as Booking.com, Expedia, Agoda etc. This is to eliminate any doubt of potential technical error, delay in rate update from channel manager or currency exchange differences. 

 

If a wrong price is shown for the reservation, check if the commission was already deducted and whether it was deducted correctly. It is important to understand each of your channels´ models and the rates you have set with them, whether they will charge the customer and deduct the commission before paying you out, or forwarding you the full gross, and charging the commission later. This model might differ within the same channel, and you should be able to check it in your extranet settings. 

In most cases, it is enough to log into your extranet of the channel, and check your calendar and other distribution-related settings there, or you can message their customer service and ask for help.  

 


Lastly, the creativity and innovation in the big tech companies can be never ending. Any of those OTAs might start playing a new game, trying to win the market. Most important thing for your business is to follow the hospitality news, read fine print of terms and conditions you signed in the contract, regularly check the updates from your contracted channels and distributors, and educate your staff on how to help you offer best rates on your own website. 

 

Review your strategy based on the main KPIs: ADR per channel, occupancy, RevPAR, and consider reseller or undercutting rate parity issues. Eliminate contracts that only take time to set the prices right, and that barely sell any rooms. Focus on your website as the main channel, and along with it the major partners that sell you for the right rate, in the right numbers. 

 

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