Earlier this week, PhoCusWire reported that hoteliers across Europe were being encouraged to join a class action lawsuit against Booking, the case revolves around the legality of so-called parity clauses in the agreements between the OTA and hoteliers.
Are European hotels right or wrong to go after Booking..com for requiring rate parity in hotelier’s publicly available distribution channels?
Here is my take:
This lawsuit is like suing the restaurant where you had a nice meal for charging you high prices. Instead of fixing their own direct distribution channel, European hoteliers have been embracing for decades the lazy man’s distribution game—via the OTAs.
European hoteliers—60% of which are independent—are notoriously averse to technology. They do not invest adequately, if at all, in technology, marketing and talent: Less than 10% of them have a CRM, guest reward program or an RMS in place. Digital marketing, content marketing, CRM marketing, AIO [artificial intelligence optimization]—how do you spell that?
What would happen if European hoteliers were free to publish lower rates on their websites? On websites that are at least five years old (ancient in Internet years), with content and SEO last updated before the pandemic, with a Christmas Special still hanging in there, and with 3,000 visitor sessions per month, 80% of which are search engine spiders and malicious bots?
There is no doubt in my mind that the dominance of Booking..com in Europe is hoteliers’ own doing. The result of this dominance? The direct online vs OTA booking ratio of European independents is 1:4 even 1:5, compared to 2:1 even 3:1 for the global hotel chains like Marriott and Hilton.
As for rate parity, I believe it is good for hoteliers, not bad! But what kind of rate parity are we talking about? Hotel-imposed rate parity, not OTA-imposed one!
Typical leisure and unmanaged business travelers engage with multitude of different digital touch points (Google Research claimed 48 such touch points) before making a hotel booking: search engines, AI search platforms, social media, metasearch, OTAs, review sites, hotel owners websites, etc - all of this via different devices and multiple times. Rate parity allows the hotel to keep the brand promise!
What should independent hotels do?
- Implement and enforce a rigorous Rate Parity policy across all publicly available distribution channels.
- Subscribe to a rate monitoring application like Lighthouse, Triptease, RateGain to automate the monitoring of rate parity across distribution channels.
- Introduce Best Rate Guarantee on the property website guaranteeing that travelers won’t find lower rates than your website’s for the same room/stay period on any publicly available channel.
- Create a gated rate “Instant Rewards” program on the property website, which promises perks, benefits and member discounts if users sign up.
Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist
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