One of the popular phrases in the online travel space lately has been “price parity”, an idea pushed by the OTAs (online travel agencies) and expected of the supplier, as outlined in this article.
If I were an accommodation operator, I would ask myself, “why does it matter, surely I can play with prices across the sites I deal with, who will even notice?” Not only that, as an operator I would naturally have better relationships with some OTAs than with others, and I would like to offer better prices on x site versus y site. Factor in a variety of commission levels across OTAs and all of a sudden it is conceivable I would have a wide variety of prices online for even my core products.
Unfortunately, one of the immutable truths of online travel consumption is that people shop around, and price differences will be noticed by the online shopper. Usually, these differences will not matter – the traveller will merely take advantage of the lowest price they find and book there. Aggregator sites have ensured that this is a simple task.
There are occasions where such a wide variety of prices across different OTAs and travel websites can erode trust in your property and may lose you a booking that you might otherwise have secured. I recently came across an example of this on my site, Travelbug, where travellers can make enquiries direct to the supplier. In one such enquiry, the traveller indicated that they were so confused and taken aback by the variety of prices they saw across the internet for what seemed to be the very same products, that they were compelled to ask the hotel why this was happening:
So how should you manage your pricing while allowing for your relationships with OTAs and managing profitability despite varying commission levels? I’d like to suggest a few things:
- Commission levels on retail sites are a cost of doing business. If you have decided that the audience provided by an OTA or a network of resellers is valuable to your business then you have to accept the commission level charged by that site or group of sites. If the commission level is too high for you, don’t participate in that network.
- Your core products, eg ‘Standard room’, ‘Queen room’, ‘Studio apartment’ and so forth should have the same retail price across all third party channels and OTAs
- Use added value products and multi-night rates to differentiate across your preferred sites. For example, offer a B&B rate on your favourite site that you might not offer elsewhere. Shoppers making comparisons will not find this confusing or feel that you’re playing a game – it’s an entirely different product
- Use channel management software to make your pricing updates easy and seamless
- Lean on the account manager or support team of the OTA in question to help you configure your rates
If you follow these key points, you’ll have happy OTAs and happy online shoppers.
I’d love to hear your reactions to this, the first of my contributions to this blog site, so don’t be shy!