Accommodation Rate Parity Analysis

By Michelle Smith, Gravity Projex

🎯 Why Is Rate Parity Critical for Your Business?

• Trust & Credibility: When guests find lower rates than your website on OTAs, it damages brand credibility where guests question pricing & product integrity
• Revenue Leakage: OTAs typically charge 15-25% commission. Every booking made through an OTA instead of direct costs thousands in commission annually
• Guest Data Loss: OTA bookings mean you don’t capture valuable guest information for future marketing and relationship building
• Guest Relationships: OTAs own the customer relationship, making it difficult to build loyalty or encourage repeat bookings
• Market Perception: Higher direct rates signal that your website isn’t the best place to book, encouraging guests to book through OTAs
• Competitive Disadvantage: In an era where travellers compare prices across multiple platforms, rate disparity immediately puts you at a disadvantage

💰 Encouraging direct bookings should be a cornerstone for revenue strategy

• Save on Commission: Eliminate the 15-25% OTA commission and keep more revenue
• Build Customer Relationships: Direct bookings give you access to guest data for personalised marketing and loyalty programmes
• Increase Lifetime Value: Direct customers are more likely to become repeat guests when you can market to them directly
• Better Margins: Even offering a 10-15% discount on direct bookings still yields higher profit than OTA bookings
• Flexibility & Control: You control the booking experience, add-ons, and can offer exclusive perks to direct bookers
• Brand Loyalty: Direct relationships foster stronger brand loyalty and positive word-of-mouth

✅ Best Practice rate parity amongst OTA’s and direct website:

This achieves multiple goals:

• Direct rates should be on par with OTA’s yet be the most attractive booking option as the official hotel website
• Still maintains healthy profit margins (saving more than the discount in commission fees)
• Incentivises guests to book direct without violating OTA agreements
• Creates a compelling value proposition that’s easy to communicate in marketing
• Positions your brand as rewarding loyal, direct customers

⚠️ The Consequences of Poor Rate Parity

When your direct rates are higher than OTA rates (inverse rate parity), you’re essentially:

• Advertising to potential guests that they shouldn’t book direct
• Paying OTAs to take bookings you could have captured yourself
• Training your market to always shop around rather than trust your direct pricing
• Losing tens of thousands (or hundreds of thousands) in revenue annually
• Damaging your reputation as a transparent, guest-centric business