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The importance of price parity in the accommodation industry

Why listing your property cheaper than OTAs isn't always the best strategy

For accommodation providers such as hotels, motels, and vacation rentals, maintaining price parity across all online channels is vital to long-term success.

Not only does it prevent customers from shopping around, but it can also help build long-term customer loyalty and improve profitability. Price parity refers to the practice of maintaining consistent pricing across all online channels, including Online Travel Agencies (OTAs), your own website, and any other third-party sites where your property is listed.

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One of the common mistakes that many accommodation providers make is trying to undercut OTA prices by listing their property for a lower rate on their property website. While it may seem like a good idea to attract more direct bookings, it can have the opposite effect in the long run.

When a customer sees a different rate on your website, they may decide to shop around in the hope of finding an even better deal somewhere else. However, this can often backfire, as they may end up finding a cheaper deal with a different property altogether on another OTA site. Had you not encouraged them to shop around, they would never have come across this deal at all.

To prevent potential guests from shopping around, it is essential to think smarter about how to keep them on your website once they have landed there.

The first step is to ensure that your Channel Manager has a tool that clearly shows the customer the price is the same across all distribution channels. By displaying your listed prices, the customer will realise there is no need for them to shop around, as they know they are getting the best deal possible.

But how do you win the customer over to book direct with you? The answer lies in providing value-added services that the OTAs cannot offer. For instance, offering flexible cancellation rates, late check-out, or a “Best Room Guarantee” will usually sweeten the deal for the customer. You can also provide extras such as breakfast vouchers, a drink on arrival, or discounts at local tour centres to entice them to book with you directly.

By winning the customer over to book with you directly, you save the commission fees that you would otherwise have to pay the OTA. Moreover, you own the customer data, which is essential for long-term business success. Having access to complete customer data allows you to build a relationship with your guests well before they arrive at your property.

The added value of owning customer data is often undervalued, and most accommodation providers fail to use it to their advantage.

By using pre-arrival communication, you can encourage your guests to upgrade their room, book a table at your restaurant, or organise a tour through your referral link. These added services can help build a long-lasting relationship with your guests and improve customer loyalty, whilst simultaneously improving your bottom line.

In summary, price parity is essential for the long-term success of your property. It is crucial to avoid undercutting OTA prices in order to instil customer confidence, preventing them from shopping around. Instead, focus on providing value-added services to win customers over to book with you directly. By doing so, you save on commission fees, own customer data, and have the opportunity to build a lasting relationship with your guests. Remember, the key to success in the accommodation industry is to focus on the long-term relationship with your guests rather than the short-term profit.

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Tony
Tony
1 year ago

While there are some good suggestions in here about embellishing the product offered, and capturing guest data, it must be remembered the industry has fought long and hard against OTA’s to eliminate parity and to make demands for it illegal, and with good reason.

It’s essential to capture the booking without giving away more than your 15% advantage over OTA’s.
And once captured, treat your guest so well , they’ll never find the need to look elsewhere.

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