Hotel Rate Parity Issues – How to Identify and Fix Them

Hotel Rate Parity Issues – How to Identify and Fix Them

Rate Parity issues can be very harmful to a property when they are not controlled properly. Dealing with price parity issues is an ongoing task and can be difficult to handle. This article is a step by step guide to deal with problems more efficiently.
Hotel Rate Parity Issues How to Identify and Fix Them

Rate Parity is one of the most important key success factors for hoteliers who want to increase their visibility on OTAs, increase their margin, and drive more direct bookings.

However, it is also something which is not easy to achieve when you don’t have the means like big hotel chains such as Sofitel or Marriott.

Olive & Lake manages the online presence for many properties around the world and this guide will help independent hotel owners to successfully manage their own rate parity issues.

Note that this is a long post about rate parity issue. This article is more than 2,000 words. Bookmark this page to come back later!

Hotel Rate Parity Checker

Check your hotel’s rates on multiple channels.

What is a Rate Parity issue?

Hotel rate parity is where hoteliers try to maintain the same rates across all their sales channels.

Rate parity issues, also known as rate disparity, describes the situation when you find varying rates across different sales channels.

For example, you might find your rate on booking.com on a specified date for $100 per night, but on Expedia for the same room and dates, the price is only $90 per night.

This can happen for many different reasons.

Rate Parity Issue Example between Booking.com and Agoda
Rate parity issue example between Booking.com and Agoda

Why is Rate Parity important for hoteliers?

Rate parity is important for hoteliers because it can impact the following areas.

  • OTA rankings
  • Direct bookings
  • Profit margins
  • Brand image
  • Distribution partners

In some instances, it might be preferable to have price disparity. For example, you might want to focus your marketing efforts on one OTA such as Booking.com because they send you more bookings or promote direct bookings with a cheaper price.

However, if an OTA finds cheaper prices elsewhere, they’ll do less to promote your hotel.

How to identify hotel rate parity issues?

First, list all the channels where you are selling your rooms. Popular OTAs include Booking.com, Expedia, Agoda and their subsidiaries like Hotels.com is owned by Expedia and their rates come from Expedia Partner Central.

Organise your work and create an Excel table

Now that you have the list of channels, you will need to note your findings. The easiest way to do this is in a spreadsheet.

Create columns with check-in dates, check-out dates and the length of stay which you are planning to check.

You need to verify multiple dates and vary the length of stay because the rates might differ depending on the length of stay or the stay dates.

Here is an example of an Excel table have used in the past to check our clients’ rate parity for 1 year.

Spreadsheet to search rate parity issues
Spreadsheet to search rate parity issues

Check the Public Rates on your Sales Channels

Go to booking.com and start searching the dates you entered in your spreadsheet. Then note the price in the appropriate column.

Repeat the same operation for each check-in and check-out date.

Then repeat this task for each sales channel.

You can see that this is a very time-consuming task. In our example, we have 4 channels – booking.com, Expedia, Agoda and Trip.com and we are checking each day for one week, then 1 day per month for 12 months.

It’s important to check multiple dates so that you are more likely to find rate parity issues.

In our example, we have 4 channels and 19 dates to search. This means you must perform 76 searches!

To help us to manage multiple properties, we realised that this is very inefficient. Therefore, we developed a simple tool to do just that. We created a Hotel Rate Parity Checker to spend more time on promoting our client’s hotels rather than spending time collecting data.

The tool saved us so much time that we realised our clients would also benefit from using this tool, so we decided to make it public.

Our rate parity checker does an automatic daily scan of your online listings on all the major OTAs (booking.com, Expedia, Agoda, Trip.com, and Hostelworld) and displays the data in a graph so you can easily see any rate parity issues.

This alone will save you hours of work each week. There are other tools available to do this, but they all come with high monthly fees. We created a cost-effective tool for independent hoteliers to save time and effort.

You don’t need to do manually check prices, just wait for your daily email, check your reports and quickly check your rate parity for any issues. This allows you to have more free time to get back to running your hotel.

Watch a video of our tool in action here.

How to fix hotel rate parity issues

So, you’ve checked your rates and you’ve found some rate parity issues, it’s now time to fix them!

Olive & Lake Rate Parity Checker
Olive & Lake Rate Parity Checker

Price parity issues can be caused by many different reasons. We’ll run you through the process of identifying what is causing the problem and how to fix it.

If after following our guidelines, you still cannot solve your problem, Olive & Lake offers an outsourcing Revenue Management Service for hotels and we can solve it for you.

On top of this, we create tailored solutions for your property to increase your visibility and rankings, improve your listing, upsell, email marketing, and increase your direct booking rates. Read more about our Revenue Management Service for Hotels.

Possible causes of your Price Parity Issues

Here is the list of the most common things that can cause you price parity issues:

  • Channel manager and OTA connection issues
  • Incorrect promotions and special offers
  • OTA created discounts which they take from their commission
  • B2B partners, resellers and wholesalers selling your room rates to OTAs

Channel manager & OTA connections

The first thing you need to check is if you are sending the correct rates and that these rates are being correctly received by the OTA. This will identify whether you have a connection problem.

If you’re not using a channel manager, you want to check that you have entered the rates correctly in the OTA dashboard.

However, we recommend that you use a channel manager and our preferred system is Cloudbeds. Read our Cloudbeds review.

First, login to your channel manager and check the connections and room mappings.

If you are using Cloudbeds, go to the channel settings. If the icon is green, then everything is good. However, if the channel is orange or red, it means you need to fix an issue.

Cloudbeds Channel Settings Page
Cloudbeds Channel Settings page

The same will apply to whatever channel manager you are using.

You might need to contact support and ask for help if this is a technical problem. They will provide you with the solution on how to fix it. If you can’t fix it by yourself, contact Olive & Lake, and we can fix it for you.

If you’ve not found any issues with your channel manager, you now need to check the rates in the OTA’s backend.

In Booking.com you can go to the calendar view to check the rates. You need to compare the rates and inventory with what you found in your channel manager. These should be the same.

Booking.com Calendar Page
Booking.com Calendar page

If all of this is correct, then we can move on to the next step. If you’ve found a problem here, you can reach out to booking.com and ask for advice.

You can follow the same steps for other OTAs.

Incorrect promotions and special offers

Now that we are sure that we don’t have a connection issue, we need to check that we have created consistent promotions on all sales channels.

Login to the OTA where you found the problem and check the promotion page. You might want to login to other OTAs to compare the promotions.

For example, if the problematic channel is booking.com, we would log in to booking.com extranet and then go to the Promotions page.

Booking.com Promotions page
Booking.com Promotions page

Check if you are running a promotion that you haven’t setup on the other channels. If this is the case, then you need to edit your promotions to be consistent.

The golden rule is consistency! If you run a promotion or join a campaign on one channel, you need to create the same promotion on the other channels! Different channels have different methods of creating promotions and it can sometimes be confusing. Contact Olive & Lake if you need help with this.

If you find that all your promotions are the same and everything is set up correctly, you’ll need to move to the next step.

OTA Created Discounts

Most of the time, price parity issues are caused by the OTAs themselves! When it comes to online bookings, OTAS are always seeking to improve their market share.

Sometimes, they will add a promotion to attract customers looking for the best deal. They give a discount from their own commission, so you still receive the same rate. However, this does affect your rate parity.

You will need to contact your market manager to resolve this issue for you.

To win market share OTAs are willing to cut down their margin and trigger special offers and coupons for a specific date and advertise these rates on metasearch sites to get more bookings.

The market manager will often turn off the promotion, but the chances are that in a couple of days or weeks this issue will happen again, and you will have to request that they stop their promotion once more.

This is an ongoing problem and one which needs careful attention. Olive & Lake can do all this for you. We will check your prices, find the problem, and reach out to your market manager to fix it. We keep track of all your rates and fix them as soon as we notice an issue. You don’t need to do anything.

B2B partners, Resellers and Wholesalers

If you notice cheaper rates on the OTA’s live site that don’t appear in your calendar, then it could be that they got this rate from one of your B2B partners or wholesalers.

For example, you might have an agreement with a local travel agency or hotel room wholesaler at a much cheaper rate than you display publicly. This partner, then goes to Agoda and offers them a rate which is cheaper than your direct rates.

Some OTAs will display B2B rates alongside your prices on your hotel listing. Agoda and Ctrip are notorious for this problem.

This is not fair, but if you agreed to sell to another partner at a much cheaper price, you should make a contract which forbids them from publicly advertising a cheaper rate online.

This is the worst-case scenario and the hardest issue to solve. In some cases, it can’t be resolved, and you will need to renegotiate terms with your offline partners.

First, you need to identify which travel agent or wholesaler is selling your rooms online. You might need to reach out to your partners and ask them directly to stop.

If you can’t find out which wholesaler is providing the cheaper price, you can ask your OTA market manager. However, they often refuse to tell you.

Therefore, your last option available is to make a fake a booking yourself. Find the cheaper rate and book the room. When the booking has been processed and confirmed, you will be able to identify the source of the booking.

You will either be told in your booking confirmation email who just made the booking, or you will be contacted directly by your partner to arrange the booking. Either way, you will find out where this reservation came from.

You now have all the information needed to fix the problem from a B2B partner who is undercutting your online rates.

How to Deal with a Rate Parity Problem

Rate parity issues have a big impact on your online performance, that is why it is important to handle it carefully.

Checking your rate parity is an ongoing task that needs to be done regularly. This is a time-consuming task because it means checking all your online sales channels for multiple dates and lengths of stay. For 4 channels, you need to check up to 76 different rates.

Solutions exist and are available on the market to help you manage this part of the job.

Many of the existing rate parity tools are expensive and not tailored for small/medium sized businesses or independently owned properties.

Therefore, we created an affordable and user-friendly Rate Parity Checker to help you perform this task automatically.

Following this step by step process of checking various issues will save you time. If you found a rate parity issue you should check:

  1. Channel manager and OTA connection issues
  2. Incorrect promotions and special offers
  3. OTA created discounts which they take from their commission
  4. B2B partners, resellers and wholesalers selling your room rates to OTAs

I hope you enjoyed reading this blog post. If you have any questions leave us a comment below or contact us here.

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