hoteliers to offer a best price guarantee on
their own website since OTAs will be able
to discount their commission rate to lower
prices for members or certain categories
of people. Whether it has the effect of
lowering prices will still most likely depend
on supply and demand in the market, but
it will certainly make life more complex
for hoteliers (although it only affects IHG
at this stage it will most likely become
common practice).”
or hotels in the UK
• Note that the commitments set out a
minimum level of discounting freedom
- they do not affect other forms of offers
you may agree with OTAs, such as
package or opaque rates.
Hotel discounting
• Hotels will be able to offer discounts in
an equivalent manner to OTAs. Expedia
and Booking.com should at least give
hotels the freedom to discount freely
to consumers who meet the criteria
outlined above. There should be no
limit to the amount of discount a hotel
can offer. Hotels should take advice to
ensure that any rate parity provisions
in place between them and their OTA(s)
do not apply to discounts offered to other
hotels’ or OTAs’ closed groups.
“The effect will be interesting in the context
of a market which is gaining strength
at present. Hoteliers will seek to retain
control of their inventory and pricing, and
obviously avoid expensive commission
rates to the extent possible or desirable,
without impacting overall performance.
I would expect the larger hotel companies
to be actively managing their inventory
in this context, and they have specialist
people to do this within their organisations.
I suspect that for independent hoteliers
the management of their rooms inventory
just became much harder. The true impact
of the OFT action will only become clear
over the coming months as the realities
manifest through actions of hoteliers and
the OTAs.”
Peter Hancock (above), Chief Executive
of Pride of Britain Hotels told HT:
“I do not see that this new ruling changes
things very much, as it is so simple for any
customer to become a member of a ‘closed
user group’ by clicking a button once. The
fact remains that OTAs can eat into their
own generous commissions if they wish
in order to reduce prices further and this
does undermine the concept of rate parity.
It will still be possible for third parties to
undercut hotels’ own published rates.
“Having said that, hoteliers are free to open
their inventory to whichever channels they
prefer and I often hear the use of OTAs
being described as an effective way to fill
rooms that would otherwise go empty.
In my opinion the best policy is to engage
the services of a professional revenue
manager who can ensure you don’t get
sucked into unnecessary discounting.
This is especially important at the luxury
end of the market where the break even
cost of providing a room is very high
and so much resource is going into the
maintenance of high standards.”