The Hotel Travel Distribution Landscape can be like a tricky puzzle. It’s a place where your hotel’s price plans can get tangled up and occasionally undermined by unforeseen OTA practices.
Imagine you’re playing a game where your hotel’s pricing plans sometimes get mixed up and tripped over by unexpected moves from online travel agencies (OTAs). To understand these sneaky moves, let’s unravel this complexity with two hypothetical OTAs:
- RoomsToSellIndirect.com: Your contractual partner
- RoomsToSellCheap.com: A non-partner OTA.
In our story, RoomsToSellIndirect.com shares your room availability, prices, and inventory (let’s call this the ARI) with RoomsToSellCheap.com. Then, RoomsToSellCheap.com publishes lower prices. This act of lowering prices can eat into your direct and indirect earnings, creating a tricky situation for your hotel. So, let’s dive deeper and explore how this happens and what you can do about it!
Understanding Forward Distribution and Its Impact on Your Hotel
So, how does the ARI (Availability, Rates, and Inventory) sharing work, and why does it matter to your hotel and revenue management tactics?
Imagine you’re selling a room at your hotel for €100, which is the price most guests will see (we’ll call this the Best Available Rate or BAR). RoomsToSellIndirect.com, an OTA you have a deal with, might get a net rate from you – let’s say €90. This net rate is often hidden from plain view. Often these rates are packaged with transportation, flights or other services. Within this offering the OTA usually collects payment from guests and then pays you, instead of guests paying you directly.
Now, the clever part (and the problem!) starts when the OTA has room to “play” with their profit margin, thanks to that €10 difference between your BAR and their net rate. They can stick with selling at €100, keeping a neat €10 profit, or they can decide to sell it a bit cheaper to entice more guests. This could mean they sell your room for €95 instead, offering a better deal to guests than your own website does! This is a typical example of a Rate-Undercut.
The issue begins here. Even though RoomsToSellCheap.com is offering the lowest price, guests still find it through RoomsToSellIndirect.com, because that’s where the ARI information originally came from. Now, RoomsToSellIndirect.com is essentially promoting a competitor’s lower price, which sounds a bit odd, right?
Taking Charge: Your Hotel, Your Rates!
Don’t be sidelined by OTAs, technicalities, and claims of unawareness in a game that’s been playing for years. And most important: don’t let these tactics slide, it will harm your business in the long run!
Taking constructive steps against disruptive forwarding and rate undercutting involves navigating through multiple layers, each with its unique challenges and solutions. Here are four elements to gain control in this travel landscape.
Legal Route: Ensure contracts with key OTAs like prevent harmful forwarding actions. Dive deep into clauses about Rate Parity, Last Room Availability, Lowest Price Conditions, and Forwarding Distribution to understand and potentially contest the OTA’s actions.
Direct Dialogues: Forge a clear and ongoing communication path with RoomsToSellIndirect.com. Regularly scheduled meetings to discuss performance, tackle undercutting, and steer through forward distribution complexities will carve out a productive space for resolving issues.
Rate Parity Protocols: Apply a strict rate check across all platforms to catch and address disparities early. Keep in mind that forward distribution markets may employ geofencing, displaying different rates depending on user location. Several rate tools can help unravel these forward distribution puzzles.
Empowering Direct Bookings: Strengthen your direct booking approach by potentially providing better conditions or even superior rates on your platform. This doesn’t just amplify direct revenue but also helps build a stronger connection with your guests. Although championing rate parity is vital, bolstering your direct channel will always be crucial in the broader perspective.
Unlocking Prosperity with MinersRepublic
Navigating through the complex maze of hotel distribution and OTA landscapes requires a guide well-versed in the intricacies of the industry. MinersRepublic is here to support your distribution path. We can help you with insights, revealing hidden challenges and opportunities.
Embarking on this journey, we don’t merely traverse the landscape; we do so together with you to make sure your configuration minimizes manual effort and significantly enhances operational efficiency. We align your hotel’s strategic goals with targeted, effective strategies to plan according to your hotel needs. We can help regain control over your rates and terms & conditions.
Explore more about our Channel & Distribution Services to set the stage for a fruitful voyage through hotel distribution.
