End of rate parity in hotel online distribution will change the rules of the game.

After the French parliament decided to fine online travel agents (OTA’s) that included rate parity clauses in their contracts (read more here), this is what everyone might be thinking right now:

Online travel agents are the bad guys! They are exploiting hotels.

At Climber Hotel we don’t believe this to be true.
If by one side, OTA’s are defending themselves by establishing guaranties to reward their effort on selling hotel rooms, they are also the main force in generating hotel bookings. However, as hotels want to reduce the high commissions they are currently paying to OTA’s, the end of rate parity shines as an opportunity.

The end of rate parity clauses is an opportunity

If the abolishment of rate parity in online hotel distribution continues to spread to other European countries, something will definitely change and the focus will be in new distribution and pricing strategies.

Hotels will be more avid to implement innovative revenue management strategies and the leverage of hotel data for micro-segmentation will take place, as it is already happening in other industries. Another benefit derived from ending rate parity is the opportunity for hotels to start using dynamic tariffs and take advantage of demand variations in real-time.

How OTA’s position such as Booking.com or Expedia‘s will be impacted?

OTA’s will have to find a way to help hotels sell their rooms better. And investing in the dynamic sales of rooms and micro segmentation might be the answer.

At Climber Hotel, we believe those who do not start thinking about micro-segmentation will be forgotten.