Should Hotels Use Rate Parity?

A lack of customer focus leads us to develop ineffective strategies, not only in terms of pricing but also communication. A common practice in such cases is to apply rate parity across distribution channels. This has not gone unnoticed. Hoteliers have been trained and persuaded of the importance of applying rate parity, to the point of becoming convinced that the key to Revenue Management lies precisely there, where the real difficulty resides. This is a symptom of Channel Orientation rather than Customer Orientation. I have come to the conclusion that the real difficulty does not lie in maintaining parity, but in knowing the customer and applying pricing policies suited to each of them. Rate parity applied unilaterally across all travel portals does nothing more than place them all on the same level, increasing the competitiveness of those with less capacity to generate business.   Likewise, as hotels are unique and non-repeatable, offering the same prices across every distribution channel means handing over the differentiating factor to the distribution channel, which, through its algorithms, rankings, agreements, commissions and more, will influence the hotel’s production figures to a greater or lesser extent. One thing must be remembered: the distribution channel wants to sell, and for that purpose, it makes no difference whether it sells one hotel or another, as long as it is the one making the sale. The objectives of the distribution channel are not the same as those of a hotel.