For years, the hospitality industry has treated rate leakage as the ultimate enemy, hotels invest in rate-shopping tools, stricter contracts, parity monitoring, distribution audits and endless investigations.
All chasing the same objective: making sure the same room never appears cheaper somewhere else.
Hotel distribution, however, is an ecosystem rather than a straight line. A single room may travel from a hotel to a wholesaler, then to a bedbank, then to an affiliate, and finally to an OTA before reaching the traveller. Every intermediary expands market reach, but every additional layer reduces transparency and control.
The question is, can hoteliers ever achieve zero rate leakage?
Here is my take.
Zero rate leakage is not a realistic goal, but hoteliers can significantly reduce its size and negative impact to its bottomline and distribution integrity.
Rate leakage is not a new phenomenon - it has existed for at least 20 years. Who are the rate leakers? Most of them are affiliates of the OTAs, partners of bed banks and wholesalers, etc. Since the property does not have direct contractual relationships with the rate leakers, quite often it feels helpless to stop this rate leakage, which is detrimental to the integrity of its revenue management.
There is a way to deal with rate leakers using the following approach:
- Adopt Best Rate Guarantee and empower reservation department and front desk to match any rate lower than BAR published by a rate leaker.
- Subscribe to a rate monitoring business intelligence application offered by companies like RateGain, Lighthouse, Fornova, etc.
- Refuse to honor reservations coming from repeat rate leakers.
The issue is that many hotels do not realize the impact of rate leakage on their rate integrity, and some of them, even if they notice rate leakage, do not “dare” challenge the OTAs and their affiliates, fearing worsened relationships and even repercussions.
Be bold and protect the integrity of your rates!
Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist
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