Disparity (Part 1)

Terminology, causes, examples


Terminology

As we know, by parity, we describe parity in the Online channels in which an accommodation appears (hotel website, OTAs, Wholesalers)
The term Parity was established by the agreements between accommodation and a distribution channel (usually online) in order to ensure, in particular, each Online Travel Agent, from competition.


Why should I maintain Parity?

Regardless of the conditions a property may reserve to maintain parity, maintaining parity is a proper fair play strategy that pushes to exploit the potential of all selling channels. This is because a property needs partnerships in order to achieve high occupancy at the best possible price.

If we receive the customer as the final recipient, being at par a hotel, it presents a more in-house pricing policy, hence security in order to make the reservation.

"Maintaining parity is a proper fair play strategy that pushes to exploit the potential of all selling channels."

Where is Disparity caused?

There is no general rule. The reasons vary and may consist of a reason or combination of many parameters. The main reasons are summarised below:

  • Uncontrolled distribution of prices. It mainly happens from wholesalers mr. B2B channels where price distribution or mark-up is not controlled. In these cases the distribution is automated and that is why many different selling channels arise.
  • Human factor and possible error or negligence. It applies both on the hotel side and (more rarely perhaps) on the side of the Online selling channel
  • Advanced structure of online selling channels, where time is required for the hotel to maintain parity across all channels
  • Special offers and programs that promote online sales channels (loyalty programs, hidden offers, offers by country or by device, etc.)
  • Do not use channel manager, making it almost impossible to control and change values across all channels
  • Technical reasons (e.g. wrong set-up/mapping in channel manager, slow channel manager response, bug on one of the systems, wrong connectivity between third channels, wrong meal plan or number of people, etc.)
  • Different policy of each online selling channel. It concerns two main categories: a. whether or not taxes and other charges are included in the final price, b. reduction of the commission by the OTA (unilaterally or by agreement)
  • Uninformed availability of the rooms on all channels, so the A channel has the economical room type available while the B does not have it
  • Offline contracts with Tour Operators, who distribute prices on online channels through B2B partnerships. In most of these cases, it is not clear the mark-up of the selling price, or the prices are also distributed to third parties


Examples

The most frequent examples we may encounter are:

  • OTA A activates an Early Booking campaign in the United States market, which does not trigger THE Tab B
  • Channel A should include the residence tax at the final price while channel B does not include it. This means that in a 5* hotel the price will vary by 4€ per day
  • On metasearch website (Tripadvisor, Trivago etc), net (or small mark-up) prices are displayed by Wholesaler with which the hotel does not have direct cooperation

 

Read here the 2nd part,where solutions and suggestions are presented, as well as general conclusions.

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