PhocusWire webinar: your parity questions answered

PhocusWire webinar: your parity questions answered

Last month OTA Insight partnered with PhocusWire to present a webinar, The real parity problem no one is talking about. Now available to watch on demand, this proved extremely popular, with attendees from over 30 countries, a varied audience of global and local chains, independent hoteliers and boutique hotels, as well as interest from some global tech players including Google and Microsoft.

Moderated by PhocusWire editor, Kevin May, our speakers were: Inderpreet Banga, VP of Channel & Distribution Strategy for Wyndham Hotels & Resorts, alongside OTA Insight’s Kyle Christianson, Enterprise Account Director, and Clive Wood, Global Commercial Manager for Parity Insight.

Our discussion delved into a range of parity-based topics such as: OTA and hotel marketing spend and activities; changing technology affecting distribution; and new ways of distributing inventory. A number of useful insights arose from our speakers, with Inderpreet identifying rate parity as the biggest opportunity within the changing distribution landscape, because the rate provided to the end consumer will “drive the booking regardless of website and loyalty scheme”.

With the sheer number of key points raised, we collected a lot of questions from our attendees. Answers to the most popular questions submitted during the webinar have been presented here in themed clusters.

Why should hoteliers work with wholesalers?

Some hotels may consider cutting out wholesalers altogether in the light of constant parity issues, as well as wanting to gain more control over their distribution strategy. However, this may be potentially shortsighted because wholesalers are an important part of the distribution landscape. For many hotels, wholesale business is a critical and important segment for revenue generation.

Wholesalers can provide:

  • Access to unique clients
  • Diversification of distribution
  • International marketing and visibility

Q&A-700x500-imageParity issues may cause you to renegotiate your terms with operators, but this doesn’t necessarily mean you have to terminate your working relationship. Hotels should work with their account manager to ensure that onward distribution does not occur. When it does, it essentially takes a negotiated rate and turns it into a published rate, ultimately causing disparity issues. Stress the importance of partnership and transparency in the relationship from the beginning to mutually benefit both parties to meet objectives. By insisting on more transparency on forward-distribution and getting on the front foot with your wholesaler relationships, wholesalers can be really effective partners. 

Looking ahead, hotel chains and wholesale companies are working together to address the many agreements that don’t specifically call out rate parity violations. If there is no language specific to it, hotels and chains have had challenges taking action. Whether it’s a global, dynamic rate chain agreement or a hotel-level, static rate agreement; if it is a practice that is undesired, it should be called out specifically. A “red flag” for hotels working with a wholesaler (or any partner) should be when you receive an agreement in pdf format that cannot be red-lined. Consider moving to dynamic contracts that don’t guarantee specific rates or availability so you can proactively balance your channels.

How can I stop parity issues with wholesalers?

You can stop non-contracted OTAs from acquiring the inventory from wholesalers directly by learning from experience and by viewing our parity reports, which highlight the most common undercutting non-contracted channels. Keep a close eye on their performance and do test bookings to see the wholesalers who have broken the contract are.

When you identify wholesalers who are breaking the rules it’s important to hold them accountable. Some hotels choose a “seek to understand” approach, which can consist of a series of warnings, while others go straight to a “cease and desist” letter via their legal department. Typically, the latter occurs only after repeated attempts asking to discontinue the practice with unsuccessful results. Have a clearly defined process for how you deal with problem wholesalers, which can be done by conducting data analysis that allows you to get the scope of the parity violations and therefore address the issues accordingly.

Assuming you don’t choose to cut off or minimise links with non-direct channels, the key to profitability is to negotiate as low a commission as possible (in the case of OTAs) and maximise your distribution across all channels. Use them to tap into market segments you wouldn’t be able to reach otherwise, but don’t allow them to price your rooms lower than the rates on your direct channel.

Parity issues can also be addressed by working on your strategy for selecting wholesalers. Consider the type of distribution you’d like to achieve with a wholesaler, research the strengths of different wholesalers and choose a select few based on this. Try to limit your selection as the more partners you have, the more difficult it is to manage contracts, which can create more opportunity for parity violations.

What’s the best way to form my distribution strategy?

The right balance between direct booking vs OTA business is key. Depending on the target market and distribution strategy mix, this varies per hotel per region. Flexibility, the right target market and business source - i.e leisure, corporate or “bleisure” - can help in setting the most suitable strategy.

For some hotels, it may be relevant to place more focus on direct booking so they can build a loyal customer base, lower distribution costs or even gain insight into customer data; but this doesn’t necessarily lead to revenue loss. It may impact brand awareness, which can be combated with a strong marketing strategy.

This re-evaluation of strategy may also concern those who see that the current distribution landscape shows it can be in the interests of hotels to drive business to direct bookings more than to OTAs via promotions. However, consider your hotel type. OTAs continue to be a major revenue stream for smaller properties and independent hotels, so again it’s important to know what works best for your property specifically.

It’s also important to look at value in terms of distribution strategy. Hoteliers need to question the incremental value that the additional partners, whether they’re OTAs or wholesalers, are bringing to the organisation. If you do find the wholesaler to be bringing in value, then moving from static rates to dynamic rates has been a trend among the larger brands, as well as channel managers. It’s also wise to move away from ‘guaranteed’ sales with wholesalers, as the terms and conditions of these agreements are extremely loose and the rates can be found anywhere.

When it comes to evaluating your business mix, if there are partners that are bringing you business at the cost of otherwise healthy business, there is a need to improve the relationship and readjust your strategies and tactics. Utilise your business intelligence and evaluate the cost. For example, if a business segment is bringing you a lot of one-night business on your busier days and causing rate parity issues, it’s likely they are impeding your transient opportunities through other channels and may displace longer length-of-stay opportunities.


Evaluate your business by analysing the segments and their length of stay. If performance is not meeting your expectations, readjust and work with the partners to clearly state what your objectives are. The partner will most likely help you reach those objectives because it will also benefit them in the long run.

In terms of FIT rates, some may question If the disparity comes from a wholesale or OTA taking less commission, but that’s not generally a concern of the hotel. The concern hotels have is that it impacts the published rates. It also takes a “negotiated” or “confidential” rate that has a clear revenue strategy behind it and turns it into a “public or non-confidential” rate. Some hotels see this practice as actually price manipulation by a party other than the hotel. The hotel ultimately has the final say over their published prices; and when those published prices are not sold or displayed to the customer appropriately without bundling or packaging with other travel or add-on, it is a concern.

There are also other avenues to be explored. Today, travel agencies source rates and inventory beyond the classic GDS systems; they receive rates from major OTAs and wholesalers as well. Engage in travel agency visits and partnership opportunities and use data and analytics to evaluate changes in production, pace, and forecast by each agency. When performance drops or slows, dig into the root cause and engage in conversations with the agency. Also, do the same when you see increases in performance. If your hotel has restrictions to wholesalers you may want to think about local OTAs, who should certainly be leveraged. If your hotel isn’t making use of them, your competition likely is.

Be informed when exploring this method, however; sometimes, the local OTAs do not have established, centralised connectivity and hotels have to rely on updating via their extranet. Depending on the frequency and booking patterns, this can be a full-time job and if not appropriately managed can result in rate disparity for both brand and hotel.

Haven’t parity ban and clauses been made illegal worldwide?

Q&A-700x500-image-2Parity bans and clauses vary globally. There has been recent movement on parity clauses earlier this year in the UK, with the formation of an agreement between the government and OTAs to cease certain practices around how they merchandise and price hotel rooms to consumers.

Several other European nations, as well as Australia have also been recalibrating the dynamic between OTAs and suppliers - as well as the consumers caught in between. For example, France was one of the first countries to ban restrictive rate parity clauses back in 2015. Championed by Emmanuel Macron, at the time Minister of Economy, the law allows the hotelier “to consent to any customer discounts or pricing advantage of any kind whatsoever.” In essence, hotels can price their rooms however they want on whichever channel they prefer - except on their own channels, which must match the OTA price. With so much variation in parity bans and clauses, each hotel should make decisions based on their location and the local parity related regulations.

In light of contractually enforced rate parity decreasing, there are evolving techniques for managing parity, with hotels now able to shape a channel strategy that considers both rates and flexibility. For hoteliers to capitalise on the decrease in rate parity clauses they need to think about profit. Making good use of available technology can help in analysing your channels and determining the best strategies to maximise profit.

We also had a number of questions asking around the hidden rate parity problem. These are dealt with in our infographic here.

Booking.Basic - where are new programmes like this going and will they become a problem?

In January continued its roll out of its Booking.Basic feature. Booking.Basic is an accommodation tier that appears on’s hotel listings when the rate provided to is not the cheapest available online. It offers nonrefundable rates made via a third party that is only revealed to guests after they have paid to book a room.

Whilst this rollout drew interest within the industry, this method is nothing new. A number of OTAs sell rates that have been sourced from a third party without a direct relationship with the accommodation provider. These undercutting third-party rates are usually originally intended for wholesale distribution.

What’s key for hoteliers to keep an eye on is if Booking.Basic and other programmes like it continue to grow worldwide. Amoma has been linked to this practice, as well as Expedia being seen to offer multi source channel rates. The adoption of these methods signal a change in the relationship between hotels and OTAs, as the OTAs now seem to be deciding themselves which rate will allow them to remain competitive.

This puts the onus on hotels to enforce a Best Rate Guarantee and ensure this guarantee holds true by regularly auditing their online rates in order to stem rate leakage. Looking ahead hoteliers can stay ahead of the curve by addressing onward distribution.

Further reading on parity

Take a look at our resource centre, where you’ll find further debate on parity and distribution via our Hotel rate parity eBook, regional parity reports and Annual Hotel Parity Review, and an interview with Inderpreet Banga, which features as part of another eBook: Conversations on rate parity: an exclusive eBook from OTA Insight.

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