26 Ene The end of rate parity of hotels. And now what?
Knowing the stir caused by latest news about rate parity, and the confusion it may generate, from Asiri we try to exchange doubts for small steps that make your day-to-day easier.
As we have known recently, the decision of the German competition authority (Bundeskartellamt) past December 23rd, forbidding in Germany the parity clauses applied by several intermediaries in Europe, opens a new, full of possibilities scenario that as always, will be more profitable for those who better take it.
The elimination of rate parity restrictions in hotels will give them more control on the management of their channels and their rates. Something asked while ago, and that can finally be accomplished in no time at all.
Hoteliers will have the opportunity of offering their intermediaries higher rates as compensation for the commissions’ difference, and of having the best rates in their own channels.
The danger is, however, that OTAs will keep being strong and necessary allies, and hotels still have to stretch them as part of a balanced distribution strategy.
Therefore, options for hoteliers have widened. Let’s see how you can face this new setting.
Next there are 3 advises and some hints we hope help you:
1. Make new promotions and maximize the added value to direct customers
– Instead of letting the rates to fall, hotels can opt for offering the same OTAs rates, but adding an extra value as premium WiFi, check-in/out priority, or any other advantage attractive to customers who book through direct channels.
– You can apply more customized promotions and control the offers even more.
We have to keep in mind that the information you already have from your customers always favors your side. No intermediary will be able of creating a better offer that one the own hotelier can make.
– But of course, you must be creative, bold, and thoroughly analytic and chameleon-like when posting offers, knowing to measure its conversion and profitability, and change rapidly if you do not achieve the desired aims.
- The offer of these discounts does not have to mean an ADR decrease. Quite the contrary, it can lightly increase because the offer works to reach more customers, but many of them will choose another kind of stay or services that do not have to be those of the promotion.
- And as you well know, these offers are an excellent way to encourage the cross selling, so that if you work it well, they will normally increase the ADR of your establishment.
Summing up, we believe that with a totally free-rate strategy, you will have the path cleared to start offering your customers all that you could not before because of the aforementioned regulations.
2. Motivate dull offers to habitual customers
– The loyalty programs are even going to get more strength, since they are going to be a great tool to channel direct offer.
- They “force” their customers to register somehow, and from that moment the hotelier can track their purchase habits, their preferences, their spending capacity, etc., to, based on that, offer them just what they are looking for.
- This way, hoteliers can use these connections to show offers that make their habitual customers feel more special. Generating value it nothing else than get the customers expectations exceeded every time they come to our establishment.
– Promoting well these offers will help a lot to encourage new customers to be members of these loyalty programs, increasing with it direct bookings.
– A loyal customer uses more services in the establishment habitually, what tends to help the hotelier to compensate the cost of offering a rate not possible to get in any other web portal.
3. Establish new rate strategies and manage better the online channels
– If between 20% and 60% of your bookings come through OTAs, it is indispensable that you optimize the management of your distribution channel and pay much attention on how these intermediaries adapt to this new environment too.
– You will have to re-evaluate every “piece of the cake” of your distribution, and to manage, according to your possibilities, to be more demanding with them and yourself.
– Optimize rates and profitability will cost a bit more now that we are playing with more cards.
It will be important to improve your relation with those who keep pushing the constant demand on fair rates.
– Segmenting your product having in mind geographic and demographic aspects is fine, but give every time more importance to channel segmentation.
– Ask yourself if you are ready to bear the impact of replacing an OTA by another, and periodically analyze in detail the ROI given by each one.
We believe that after this analysis, the smartest way to take advantage of the new regulations on hotel rate parity is by focusing on the value.
Hotels need to offer the customers a reason to book in a direct way. And there is no better way than by being the best from the moment the customer gets in contact with the establishment.
We are facing an unbeatable opportunity to rethink what we have done so far, and value where do we want to keep parity and where do we not. An opportunity of testing new promotions and improving in short distances to our customers.
In conclusion, an opportunity to think again in the final customer, in doing what we know best: making him/her feel at home every time he/she pays us a visit.