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The Caterer

We must strive for rate parity

24 September 2010 by
We must strive for rate parity

Technology allows hoteliers to promote rooms for sale on many different platforms simultaneously, but we should be striving for rate parity, says Peter Hancock, chief executive of Pride of Britain Hotels.

Are hoteliers stupid? An inflammatory question, you may say, and a rather risky one coming from somebody who works for a group of highly successful practitioners. But I ask in all seriousness because of a phenomenon that is both baffling and widespread, namely the failure of some in our industry to keep control of their room rates.

Thanks to technological advances, we can now promote rooms for sale on many platforms simultaneously. These may include a hotel's published tariff, its website, the websites on which it is featured by association, online booking engines and global distribution system (GDS).

The list increasingly extends to online travel agents such as Lastminute.com, Expedia and dozens more where any hotel can place inventory and achieve room sales so long as the price is right.

All very well, you may say, and indeed I know lots of perfectly savvy people who use this route to market and are happy with the extra occupancy it brings. Online travel agents are also helping to drive business into independent hotels that could otherwise be lost to big brands. So, what's the problem? I shall try to answer with a simple analogy.

Imagine your local Rolls-Royce dealer has a car in the showroom priced at, say, £200k and advertises it at the same price on the dealership's own website. Then imagine you could find the same car on a price-comparison website at £150k and that website charged the dealer a commission of 20%. Selling the car through the third party knocks a massive £80k off the achieved price and rewards the customer for looking elsewhere.

This cannot be right. Surely it makes sense for the best available price to be had by dealing directly with the seller or, at the very least, to have rate parity between the various platforms used. Many hotel businesses already do this but those who don't are allowing third party agents to exploit them when, with proper management, they could take back control of the situation.

So no, hoteliers are not stupid but the guest who pays full price and then discovers others have not may just feel a little vexed.

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