06 Jan How to observe rate parity with OTAs and simultaneously offer a lower rate on the website?
Direct sales is a difficult road to undertake: there can be many obstacles such as rate parity. Rate parity is the clause in an agreement between a hotelier and OTA in which the hotel must guarantee the same identical price on all distribution channels. This clause must be agreed to between the parties and cannot be set unilaterally, as stated in the manifesto published by HOTREC (the European Association of Hotels, Restaurants and Cafè which represents all major associations in Italy, and to which Federalberghi and FIPE adhere).
If I continue to apply a lower hotel rate on my website, sooner or later the OTA will exercise undue pressure to obtain the same price, under penalty of rescinding its partnership agreement. What can I do under these circumstances? Yield to the aggressive policies of OTAs, losing the advantage I have in indirect sales?
A solution can be adopted to ensure rate parity with OTAs and also offer a lower price to customers who book on your official website. This strategy is known as a promo code.
It’s a promotional code that offers a discount percentage on the basic rate. In this case, the promo code will be duly advertised on the website and related section catering to special offers.
The basic price will be the same as the one shared with OTAs, but thanks to the strategic use of the promo code, we’ll be able to offer a lower price on our official website, while respecting our contractual clauses and above all promoting direct sales.
This is just one of the many strategies we can adopt!
What do you think? Would you implement similar strategies to promote direct sales on your website?