Hotel rate strategy evolution across North America in reaction to the pandemic: Part 2

Hotel rate strategy evolution across North America in reaction to the pandemic: Part 2

As observed in Part 1 of this series, at OTA Insight we have been monitoring rate trends first-hand, from the frontlines of the industry throughout the pandemic and into recovery. Now in this snapshot we investigate the key trends related to chain and independent hotels across North America - how these different segments are approaching rates, and how you should look to tackle this change.

The trends outlined in Part 1 emphasised the importance of maintaining an in-depth understanding of how your regional hotel market is reacting at a given time - especially when conditions are highly unpredictable and the ability to forecast accurately has been reduced considerably.

Going forward, hoteliers in North America, like their counterparts around the globe, will need to closely monitor market conditions and collect a range of granular rate data to influence commercial decision making. Here, we once again leverage the new Rate Strategy feature available within Rate Insight (enterprise subscription) to highlight a substantial divergence when it comes to how chain and independent hotels have reacted since the start of 2020 and the rates they are advertising in the North American marketplace.

Chains are more willing to chop and change

By breaking out the data for chains and independent hotels in North America, we observe widely differing approaches. While at the start of the year, pre-pandemic, there was a 14.1% disparity between the percentages of chain and independent hotels offering semi-flexible rates (15.7% and 1.6%), at the end of our data snapshot we see a spike to 27.7% (32.1% versus 4.4%).

Obvious to the naked eye is the completely different shape of the time series. Although both averages were relatively stable pre-pandemic, that changes dramatically for chains in 2020 and 2021. Chains reacted much harder and faster to what they were perceiving, whereas independents have been gradually adjusting to what is happening.


The peaks and troughs suggest that hotel chains are following trends emerging in the market more closely. Chains are acting on what consumers are looking for, optimising for search algorithms and filters, as well as shutting off these rates when major lockdowns have occurred and putting them back into circulation when they are relaxed at scale.


Chains have been more successful at returning to non-refundable rate integrity

The remarkable differences between chains and independent hotels continue when we look at non-refundable rates, with a similar trend of disparity between the two. While chain hotels' approach to non-refundable rates has been to alter policy quickly, depending on what the circumstances are, leading to sudden ups and downs. Independent hotels have seen a steady decline in those offering non-refundable rates, with little sign of a return to prior levels.



With non-refundable rates providing security to hoteliers and guaranteed incomes, there is a clear attraction to offering them. This is why chains are re-inserting them into the marketplace again, recently reaching the highest rates since the pandemic began.

Why independents have not been able to is likely once again a case of bargaining power in the market, and the presence of powerful online players who can dictate terms and conditions. However, it may also be a case of over-caution from smaller hoteliers who may not be aware of forward indicators of demand or are not operating with the most sophisticated revenue management approaches and solutions.



It appears from our data that demand is a key determinant to how hoteliers react and introduce different rates, but so is how the compset reacts, as well as how hotel rooms are being promoted and sold. The sudden variations within markets often show very compressed timeframes where major change occurs, indicating that there is frequently a chain reaction to introduce more flexible policies, as chains follow the lead of others in the market and adjust their approach.

We can also assume that the changes made by OTAs and search engines to provide easier ways to search for flexible stays and to promote these created a snowball effect, making it more attractive to move to flexible rates and then causing additional hotels to follow suit.

Independent hotels, with their more limited resourcing and possible lack of more advanced market and rate intelligence, are not being nearly as reactive to market conditions as their chain counterparts. Even when accounting for some regression towards the mean, with a diverse spread of independent hotels as compared to chains, who can change thousands of hotel policies within days - the difference is stark.

When we consider this, alongside the variation within different geographical locations, it is clear that real-time data for hotels in your market (e.g. pricing, discounting and structuring rooms) is critical to prevent being left behind.

Advanced rate intelligence can address this situation. It can help make clear what approach needs to be taken and how you can protect your hospitality business by holding rates or introducing more flexibility at the right time.

Want to uncover city-level discounting strategies in key global markets? Use Global hotel pricing and promo trends today!

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