Rate-parity struggles continue in fragmented Europe
Rate-parity struggles continue in fragmented Europe
21 OCTOBER 2016 8:18 AM

Hotels in Europe are working to drive more direct bookings amid fragmented rate-parity rules.

LONDON—Efforts to convince potential guests they can find the lowest prices on brand websites seem to be making headway, sources said. But maintaining consistent rates across all online distribution channels and funneling guests to hotel websites remains a challenge in Europe, where the rules on rate parity differ across geographies.

Some countries such as France have banned the practice, but the reality on the ground is complicated by confusion among potential guests, pressure on hoteliers in revenue management departments to maximize revenue to the top line and, sources added, continuing skullduggery in the world of online travel agencies.

Speaking at a Hotel Distribution Event panel titled “The book direct battle,” Matt Luscombe, chief commercial officer, Europe, InterContinental Hotels Group, said education remains critical.

“I spend much time talking with GMs. We have a rate guarantee, but we were not always keeping that promise. … Having a brand means having a promise to guests. We need to clean this up (across the portfolio) and have guests understand the best rate is always on brand.com,” Luscombe said.

Osama Hirzalla, VP of brand marketing and e-commerce, Marriott International, said hoteliers need more data to continue guests’ journeys of personalization. “For hotels, data equals control,” he said.

Hoteliers can do more than OTAs due to their proximity to guests, said Charlie Osmond, CEO of Triptease, a third-party booking engine and advisory firm that seeks to increase direct bookings.

“The hotels’ greatest asset is their ability to upsell, which cannot be done as well via third-parties, but I agree with (Hirzalla): no data, no relationship,” he said.

Osmond said Europe has seen dramatic change in regards to rate parity, but the big question is how this change affects consumer buying patterns and behavior. “What is required is the combination of more data and a better grasp on how to monitor it,” he said.

Luscombe noted that key performance metrics don’t reflect the difference between channels.

“What we have seen is a level of channel shift from net rate to direct, whereas (revenue per available room) is measured on a gross basis,” Luscombe said.

The good and bad of rate parity
Panelists said ultimately rates should be in the hands those who own the inventory, but not every facet of rate parity should be considered malodorous.

Many hoteliers believe OTAs still practice underhanded tactics. But panelists said they will face an uphill battle against the OTAs’ huge marketing spend if guests do not give the practice much thought.

“OTAs are definitely doing it better, so knowing what the customer is looking for is key to hoteliers. Capture the guest,” Hirzalla said.

Luscombe said price remains the main determinant for many guests.

“OTAs have done a good job merchandising price, but they still do so anti-competitively. Retail price maintenance also is considered anti-competitive,” Luscombe said, adding that in France he had seen positives and negatives to the top line from the country’s new law banning rate parity.

Osmond said it is possible that more consumer-facing education from hoteliers would merely further confuse customers.

Hirzalla and Luscombe noted some possible threats hoteliers should be wary of, including:

  • OTAs scoring hotel firms in terms of how good they see them as OTA clients;
  • lost revenue as hoteliers experiment to find the strongest channels; and
  • the practice of OTAs “dimming” hotels and chains.

“We will work with everyone, but never at the risk of damaging direct,” Hirzalla said.

Luscombe said he had heated conversations with French hoteliers who he believed had incorrectly listed their properties as located in Paris. Hoteliers, he said, believed their properties would see fewer eyeballs if they were not included in searches for this larger market. He is optimistic about the work being done to improve brand.com and show brands “exist to create an integrated guest experience.”

Hirzalla said much ground has been gained as far as taking data and information from the booking journey and translating that into meaningful additions of value for the guests at the hotel stay.

“Some stages you can influence, and we are influencing areas we have not influenced before. We are constantly rethinking loyalty,” he said. “Loyalty was always about the hotel stay, but not other areas. It is now.”

Luscombe added: “For example, with elite tiers, we are able to provide more experiential rewards.”

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