Rate Parity

10 Easy Tips for Hotel Revenue Managers to Cope With Rate Parity Issues For 2023

November 8, 2023
Nathan Baws

As the new year approaches, hotel revenue managers worldwide are gearing up for another year of maximizing profits in an increasingly complex digital landscape. With the rise of OTAs and meta-search engines, one of the biggest challenges we face is tackling rate parity issues that restrict our ability to stay competitive.

Maintaining consistent room rates across multiple channels is nearly impossible today. While parity clauses aim to create fairness, they often hinder a hotel’s ability to thrive. So, how can we adapt for 2023 and turn rate parity into an advantage instead of an obstacle?

In this post, we will share the top 10 easy tips for hotel revenue managers to cope with rate parity issues in the coming year. We can overcome parity challenges with a strategic mindset and the right tactics and ultimately drive higher hotel profit. Let’s dive in!

Key Takeaways:

- Monitor competitor rates daily to price rooms optimally

- Leverage targeted promotions like flash sales to attract bookings

- Negotiate with OTAs for favorable contract terms and rate control

- Use dynamic pricing software to manage rates across channels efficiently

- Focus on driving direct bookings for maximum revenue potential

- Spot check parity compliance across channels regularly

- Create value-added packages to offer deals without dropping base rates

- Develop partnerships with local businesses to create special offers

- Highlight unique selling points like loyalty programs and amenities

- Stay up-to-date on the latest industry trends and channel innovations

What Are Essential Ways To Deal With Rate Parity Issues?

Here are some ways to cope with deal parity issues

1. Know Your Competitor Rates Inside Out 

To stay competitive in 2023, we need to monitor competitor rates daily and use that intel to optimize our pricing. Review rates for comparable hotels across both OTAs and brand sites. Track fluctuations over time, keeping detailed notes on discounts, high-demand dates, and channel differences. This will enable you to spot opportunities to capture more bookings when rivals hike prices or sell out. Dynamic pricing software can help automate competitor rate tracking across the web. But hands-on monitoring is still key—the human touch lets you make smarter revenue decisions. We can’t control parity issues, but profoundly understanding the competitive landscape is the best way to work around them.

Rate Parity

2. Run Targeted Promotions and Flash Sales

Promotions are a powerful way to drive bookings and lower last-minute vacancies without compromising average daily rate integrity. Tactics like flash sales on under-performing dates, seasonal packages, or loyalty member discounts can help you spot rate parity restrictions. Dedicate a portion of rooms to promoting via channels where you have more control, like email marketing and social media. You can optimize the reach and timing of promotions while avoiding automatic parity with OTAs. And don’t forget the power of promotion codes—they let you offer special rates or perks to valuable customer segments without dropping public prices. With the right promotional strategy, we can use parity clauses to our advantage instead of being constrained by them.

3. Negotiate OTA Contracts for More Flexibility

One of the most effective ways to address rate parity dilemmas is to negotiate your OTA contracts for better terms. While exclusivity clauses were standard in the past, OTAs like Expedia and Booking.com are moving toward flexible parity agreements. Push to allow last room availability exclusion from parity, allowing you to sell your remaining rooms at a premium. Insist on exemptions for qualified promotional rates, allowing targeted discounting that won’t force rate drops everywhere—work to exempt your website from parity to optimize direct bookings contractually. While negotiations take effort, the long-term revenue impact is massive. OTA contracts should work for you, not against you. So fight for the terms that boost your parity power.

4. Implement Dynamic Pricing Software

Dynamic pricing software is an absolute must-have to stay sane amid the complexities of rate parity. Today’s advanced systems allow you to adjust room rates across OTAs effortlessly, your hotel website, and other channels based on algorithms informed by real-time market data. You can respond quickly to local events, seasonal changes, and competitor moves. Built-in rate shopping eases parity monitoring and reduces over-discounting risks. Automated repricing ensures you don’t miss revenue opportunities. Look for a dynamic pricing partner that contractually guarantees parity compliance—that transfers legal liability off your shoulders. The right software saves massive manual effort so you can focus on high-level revenue strategy.

5. Focus on Driving High-Value Direct Bookings

While OTAs provide needed distribution, direct bookings via your hotel’s website have the most revenue potential. Since OTA commissions typically range from 15-25%, filling rooms via direct channels dramatically impacts your bottom line. Provide incentives like discounts, upgrades, or added amenities for booking directly. Spotlight member rates and loyalty perks to nurture repeat visits. Promote direct booking links, email offers, and phone reservations on your site. Dedicated marketing resources to SEO, SEM, social media, and email nurturing for website conversions. You can meaningfully grow this valuable channel over time by continually optimizing the end-to-end experience for direct customers. Fighting for direct bookings is a long game, but the payoff is enormous.

Rate Parity

6. Regularly Spot Check Parity Compliance

Maintaining rate parity compliance across channels takes ongoing vigilance. Set reminders to regularly spot-check rates on OTAs against your hotel site for discrepancies. Review bookings that came via a specific OTA, then cross-check what rate was shown on your website. Monitor metadata like room types, cancellation policies, and exclusionary dates for consistency. Quickly catching parity inconsistencies limits financial impacts and contractual violations. Some channel managers and dynamic pricing systems also offer parity auditing to identify issues. Automation helps, but hands-on spot checks are still essential. Compliance becomes second nature by making parity audits part of your standard routine.

7. Bundle Rooms Into Packages and Deals

 Creative packaging is a handy way to offer discounts and incentives without undermining rate parity. Bundle sought-after rooms with added amenities like spa credits, romantic turndown service, wine, and cheese, or late checkout. Tailor packages around seasons, events, or romantic occasions. To enhance perceived value, offer bundles and promo codes to loyal guests and email subscribers. Local partnerships also open attractive package opportunities—team up with area attractions, restaurants, tours, etc. Bundling allows you to maintain rate integrity while giving guests more for their money. Plus, packages help market the unique experiences at your property. With strategic packaging, everyone wins.

8. Partner With Local Businesses on Special Offers

Partnerships with local businesses open up intriguing opportunities to indirectly discount rates without violating parity. Work with nearby restaurants, shops, attractions, and activity companies to create value-added guest packages. For example, offer a 15% discount code for a local spa or tour company that guests can use during their stay. Or partner with a popular restaurant to bundle a multi-course dinner with a room booking. These outside value-adds can effectively reduce the net cost of a holiday without actually dropping your published rates—outsmarting parity creatively. The partnerships also benefit cross-promotion, expanding your marketing reach. It’s a win-win for everyone involved.

9. Spotlight Your Unique Selling Points

With so much competition online, it’s essential to spotlight the unique draws of your property. Factors like exceptional amenities, services, loyal guest programs, and local flair make your hotel stand out. Feature unique amenities like pools, complimentary breakfast, and special event rooms prominently across channels. Train staff to highlight special touches and experiences when engaging with guests. Share what makes you unique on social media and digital marketing. Loyalty programs that offer exclusive member rates, upgrades, and deals are hugely enticing. Guests gain compelling reasons to book directly with you when you effectively showcase your unique personality and perks. Your distinctiveness is a crucial competitive advantage.

Rate Parity

We must stay on top of the latest channel innovations and industry changes to stay ahead of rate parity issues. Metasearch is gaining ground, altering how consumers discover and compare hotel rates. Review sites like TripAdvisor are moving into bookings. Voice search and mobile wallets are on the rise. Dynamic discounting models are emerging. The distribution landscape evolves exceptionally quickly. I can think more expansively about parity workarounds by actively educating myself on hospitality tech trends, channel developments, and new player disruptions. The future holds inevitable surprises, but knowledge is power. Proactively staying in the know helps me prepare my hotel pricing strategy for what’s next.

In A Nutshell

Rate parity clauses certainly present hotel revenue managers with unique revenue optimization challenges. But with the right strategic mindset and intelligent tactics, they don’t have to strangle your profit potential. By monitoring competitors, leveraging targeted promotions, negotiating OTA contracts, focusing on direct bookings, and more, hotels can adapt and thrive in 2023.

The tips I shared today provide a great starting point for creatively addressing parity issues at your property in the coming year. However, optimizing distribution and revenue management is an ongoing journey. At Emersion Wellness, our team of experts can support your hotel in maximizing profits through innovative revenue-generation strategies customized to your business needs and goals.

Contact Emersion Wellness today to discuss how we can partner with you to drive hotel sales, harness technology, and develop long-term revenue growth. With data-backed guidance from our seasoned professionals, your property can provide remarkable guest experiences while reaching new profit highs. This year, resolve to overcome rate parity clauses for good. Emersion Wellness is here to help you succeed.

Frequently Asked Questions

Q1: How often should I check competitor rates for dynamic pricing?

A: Ideally, check rates from various OTAs, hotel sites, and metasearch sites at least once daily. Prices can change rapidly, so frequent rate shopping is vital for dynamic pricing to be effective. If possible, set up automated rate scraping tools for real-time competitor data.

A: Push for 10-15% commission rates if you have leverage during OTA negotiations. 20% may be the best option for newer or smaller properties but never accept more than 25%. Every percentage saved is a revenue gain. 

Q3: Should I manage dynamic pricing or use a 3rd party tool? 

A: Leveraging purpose-built revenue management software with dynamic pricing capabilities is strongly advised over purely manual management. Automation, algorithm optimization, and parity compliance monitoring provide huge advantages.

Q4: How can I encourage direct bookings over OTAs?

A: Offer direct booking perks like discounts, room upgrades, resort credits, complimentary breakfast, early check-in, or guaranteed room type. Highlight loyalty programs and unique amenities during the booking process. Use targeted email and social media promotions to nudge direct bookings.

Q5: Should I notify guests if I change the rate they booked at?

A: No need to proactively notify guests when rates change after booking. Honor the original booked rate, even if dynamic pricing adjusts rates up or down for future bookings. Add rate guarantee language at booking for clarity. 

Q6: How often should I audit channel rates for parity consistency?

A: Conduct spot checks on rates across core OTAs versus your hotel site at least weekly to catch issues early, if not 2-3 times per week. Set calendar reminders to ensure you check frequently.

Q7: What’s an excellent example of a local partnership opportunity?

A: Partner with a popular area restaurant, spa, or attraction to bundle discounted entry or a dining certificate with a room booking. Provides value for guests without manipulating room rates.

Q8: Are promotional rates exempt from parity on OTAs?

A: Not by default, but you can negotiate exemptions for qualified promo rates during OTA contract discussions. This allows targeted discounting that won’t force global rate parity.

Q9: Can I charge more on my hotel website than OTAs?

A: Likely not due to broad rate parity clauses. However, securing an exemption for your direct hotel site during OTA rate negotiations is possible.

Q10: How often do rate parity terms change with OTAs? 

A: Parity terms are evolving fast to relax restrictions, but changes only apply at contract renewal. Review clauses carefully every renewal to ensure you have ideal terms.

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