An unapologetic look at Hospitality

Parity, is it the answer?

July 1, 2011 · 1 Comment

This site should be called the rate parity blog with how much I am writing about this! But there is just so much discussion sparked by the simple word “parity” (the practice of keeping your product price the same everywhere a potential customer looks) , it seems to be on everyone’s mind. If you read my earlier musings on rate parity in the hotel industry, you will undoubtedly know I don’t understand parity at all. That is… I get it, but I don’t get it. If you know what I mean.

Mattress Sale!Surely keeping your room rate the same everywhere you publish is better than the alternative of dumping your distressed inventory on one or more aggregation sites , watch sales skyrocket but paying large commissions on already deeply discounted rooms, while alienating your customer from your own web site that expects them to book the same room at a much higher rate…

That was the situation right after 9/11 and was one of the reasons for the amazing success of the Online Travel Agent (OTA), I was reminded (in a discussion on LinkedIn) by Jim from TravelSurf. If you are facing occupancy below 20% and you are losing your shirt, you are going to do everything to get those rooms sold. Now that the economy is (mostly) back on its feet, what is the next smart pricing model?

The OTAs don’t particularly like seeing a room being sold for less than they can offer. For the last 10 years (give or take a few) that has been their claim to fame. Now that hotels are pulling this strategy into question and have become better at driving consumers to their own web site, how can the two co-exist being loving bed partners one day and biggest enemies the next?

So we’ve gotten into the practice of keeping rates the same everywhere. Your own site, the OTA, the newspaper ad, anywhere you look… Sadly, rate parity sucks! Hardly makes for a compelling shopping experience, now does it? What if Wal-mart started advertising that their Pepsi products were the same price as Target’s? Or if Big W started saying that they not only match Target’s prices, you don’t even need a coupon.

Just like OTAs don’t want to be undercut, neither do you of course. You have a room to sell, you don’t want your customer being lured away from your web site with a lower rate. Especially if you run the risk that this customer is going to see an even better deal with a competitor. But what are you going to do? The Expedias, Skooshes, and Orbitzes of the world act as the billboards along the freeway. They draw more attention to you, more than you can by yourself!

So what is the answer? Maybe you can leave a comment and let me know!

Categories: Hospitality
Tagged: , ,

1 response so far ↓

  • There are no comments yet...Kick things off by filling out the form below.

Leave a Comment