Report: OTAs are in rate parity with major chains

computer screen on a hotel booking website
A significant majority of parity loss from OTAs was from rates displayed 0 percent to 15 percent lower than brand.com rates. Photo credit: Getty Images/scyther5

OTAs are more likely to be in parity with major chains than independents and local chains, according to a recently released report from OTA Insight. 

"The North American Hotel Parity Report" examines rate-parity trends for second-quarter 2018, and shows there are significant parity-loss issues marketwide, with independents and local chains facing losses: 46 percent of tracked shops in comparison to 33 percent for major chains.

A significant majority of parity loss from OTAs was from rates displayed 0 percent to 15 percent lower than brand.com rates. Issues coming primarily from non-contracted OTAs being out of parity—24 percent in the case of major chains and 41 percent of independents and local chains—suggest non-contracted OTAs are the biggest contributors to parity loss.

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OTA Insight investigated the common causes of the losses and found top-line parity figures have stayed more or less the same, suggesting a consistency in rate-parity issues.

However, the exact channels are visibly more dynamic. This change is due to fluctuations in mark-ups of non-contracted OTAs on wholesale inventory, on which hotels have less power to change or act, sometimes due to caching issues or property-level OTA/wholesale promotions, technical issues or human error. Some of the issues include: 

  • Caching: There are issues involved with expired rates appearing online to prospective customers.
  • Property level OTA/wholesale promotions: The relationship with wholesalers and contracts, allowing for the onselling (selling something, which has been purchased, to a second buyer) of unbundled rates.
  • Technical issues: Caused by technical malfunctions of software or outdated connectivity.
  • Human error: When rates are not loaded correctly.

Snaptravel is the most frequently tracked channel for parity-loss issues for independent and local chain hotels, while for major chains, hotel power is the most common offender.

The online market survey gathered OTA Insight data from Q2 across 140 countries and more than 28,000 hotels globally on brand.com, OTAs and metasearch sites. 

“Our North American Hotel Parity Report was created with hotel revenue managers in mind,” said Gino Engels, chief commercial officer and co-founder of OTA Insight, in a statement. “Whether you’re working with an independent or major hotel chain, the report will walk you through where and why parity issues arise, as well as offer some action points that will guide toward a better future parity performance.”

Late last year, a study from Kalibri Labs showed the collective effort of hotel companies to sway people to book direct was working. The study, which consisted of 12,000 hotels, noted robust room-night and revenue growth from May through December 2016, with room nights up 7.8 percent and a net revenue growth of 9.3 percent. 

Loyalty-member rates through the direct bookings push yielded net average daily rates 8.6 percent greater than those booked through online travel agency channels, despite offering discounts to attract guests. In addition, the growth in OTA share of room nights in 2016 slowed considerably when compared to the year before, while brand.com room-night share grew at a much faster pace.

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