Disparity (Part 2)

Solutions – How to reduce dis-parity


Import

In most cases checking and correcting prices is a time-consuming process and requires specialization and proper tools. The right approach is prevention, especially with regard to offline contracts, wholesalers and mark-ups given. On the contrary, in the case of OTAs, the right tools and programming can provide immediate solutions. As mentioned, this process can be time consuming, so it is recommended that you invest wisely in the time and cost you will spend.


The most common solutions are the following:

  • Clear contract ing with holistic pricing policy (taking into account all markets and all selling channels) with special attention to mark-up, so as not to cause price inequality.
  • Solving any technical problems or set-up in one of the channels (e.g. different room type, wrong meal plan, wrong room occupancy, etc.), in consultation with the partner (often such issues are resolved directly with the use of the extranet).
  • Equal management of LAOs. Registration of offers on all channels (e.g. last minute offer, early booking or min. stay) and room availability. At the same time a common strategy in loyalty programs or price differentiation by country, device, etc.
  • Detect "leakage" of prices through wholesales and manage them (with price adjustment, commission or mark-up). This procedure requires either selective closing (possible) channel or booking by the hotel itself in order to locate the source.
  • Collaborate with channel manager, to distribute prices correctly across all channels and automate the process (time reduction).
  • Frequently check your accommodation on online channels to identify differences. Some OTAs provide tools on the extranet that indicate price differences (date, price, channel). To which specialized users, it is recommended to purchase and use Rate Intelligence and/or Rate Shopping tools.
  • Insistence on resolving issues related to the policy of each selling channel. In this category we often come across cases such as commission undercutting (reduction of commission by OTAs) or non-display of taxes/charges at the final price (apart from TAB, regular taxes are also found on metasearch websites).

Commission undercutting: THE OTAs, due to a large profit margin (~15-20% commission) and due to intense competition, in recent years and more strongly since the end of 2018, they are reducing the price, by automatically reducing their supply, so that they are always competitive with the other LAAs.

This tactic often leads to confrontation with the other partners, but also to a possible drop in sales of the brand.com (hotel page). This practice is highly competitive, and hotels often fail to cope and become ineffective in their direct sales (e.g. conversion reduction of their website, reduction of ROI from google ads, inability to provide best price guarantee, etc.).

Residence tax: This tax was recently applied in Greece (depending on the type of accommodation) and is collected directly from the hotel. The stark differences are presented in 5* or 4* where the tax is 4€ and 3€ respectively.

Conclusions

In conclusion, it is certain that the properties must maintain Parity because they gain better control over their sales. Each hotel has to choose the time and cost to invest in this purpose, as well as what tools to use and what procedures it will implement. Extreme practices (e.g. termination of a contract instantaneously) are clearly not proposed because they damage partnerships and roi. Sound data customization and win-win solutions will reward the customer and therefore sales.

 

Read here the 1st part,showing the terminology of (dis)parity, what is caused, as well as some practical examples.

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