What is rate parity and how you should use it

Yup. We said it. The two words everyone hates when it comes to OTAs, well maybe behind contract and commission. Rate parity. What is rate parity and can you as an independent innkeeper use it to your advantage?

Let’s start with what rate parity is. Essentially it’s an agreement to offer the same rate for the same product across all online channels. If Sally Shopper is looking for a room, she’ll see the same rate on your website that she would on Expedia or Booking.com. It acts as a guarantee for the OTAs that you won’t sell your inventory at a lower rate than you would with them.

Is rate parity a challenge for independent innkeepers? It certainly can be but following rate parity clauses also has its own benefits. With rate parity, you can:

• Establish trust: When travelers see the same rates on your site and the OTAs, they know they’re paying the fair price for the room. Your property also benefits from the fact that a lot of these sites utilize reviews so travelers can learn more about your property and the experience and thus feel more comfortable making the booking when they get to your site.
• Benefit from better marketing: Thanks to all the commissions, the OTAs will have a much larger budget for marketing and reaching travelers your advertising budget might not meet.
• Book new clientele: Along the same line of better marketing, you might get bookings from clients who wouldn’t have found you through other channels or maybe business travelers who have to book through a specific OTA.

Now, you might be thinking, “OK, that’s great but how do I encourage more direct reservations?”

• Use promo codes or special discounts: Have your guests subscribe to your email marketing or follow you on social media where you can share promo codes or special discounts that can only be booked directly. You’re not lowering your actual room rate so you’re still in line with rate parity.
• Implement a loyalty program: Us a loyalty program and only reward guests that have booked directly with you. Whether they get extra perks or a free night’s stay after so many nights at your property, a loyalty card can be a great tool to ensure direct reservations.
• Offer exclusive amenities: Make it more valuable for your guests to book directly on your site or by calling by offering exclusive amenities like free parking, free WiFi, breakfast, or room upgrades.
• Teach guests to book direct: Through email campaigns or thank you letters, just remind your guests that they’ll always get the best rate and amenities by booking directly with you.
• Use meta search sites: Another option, though still paid, is to use meta search sites’ Pay Per Click campaigns. Using TripAdvisor’s TripConnect program can often be a cheaper option as you’re paying a smaller amount when someone clicks into your own booking engine instead of paying a set commission for the booking. Plus, by getting them right into your own booking engine, you can upsell with packages or add-ons.