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The Truth About Hotel Rate Parity

September 18, 2015 Hotel Trends No Comments Print Print Email Email

Wego, the leading travel search site in the Asia Pacific and Middle East, unravels the myths surrounding online hotel rate parity.


“Finding the right hotel and getting a good room rate can be a struggle even for the most seasoned traveller,” said Craig Hewett, Wego co-founder. “I was once chatting to fellow travellers while holidaying with family in Thailand who were boasting about the great rate they’d been able to secure at the hotel. They were rather taken aback when I told them I’d secured the same room for US$50 per night less than what they’d paid.”

“Online rate parity, especially in Asia, is a myth,” he added. “There’s a misconception that flights are the big ticket item in a travel itinerary, yet by far the largest costs are attributed to hotels and food and beverage. I was able to save US$350 in total on my Thai accommodation, which equates to another airfare or room service each night.”

Hewett says that many believe that booking directly with a hotel equates to receiving the lowest rate, but it’s not always the case. There’s a few reasons for this.

“Close to 70 per cent of all hotels in Asia are independent and run as small businesses devoid of the pricing sophistication enjoyed by global hotel chains,” he explained. “In many cases they don’t have efficient online booking systems to power their websites, nor the resources to manage fluctuating pricing, but instead need to focus on the huge task of managing hotel operations.”

The result is that third party websites (online travel agents – OTAs) are contracted to help manage and extend their reach online.

“In many cases sites such as booking.com and Expedia have better rates than those advertised on the hotel website as they rely on the OTA to bring in their bookings,” Hewett adds. “OTAs live and breathe the internet; their entire business is online so they’re smart and creative in their merchandising and discounting methods, sometimes using their own commission as a discount mechanism to stay ahead of their competitors.”

The business significance for OTAs is the lifetime value of the customer.

“Because there’s a multitude of price differences for the same room types across all star standard properties online, the best advice is to shop around,” Hewett continued. “That’s where travel search sites who aggregate all the deals in one spot are so helpful.”

“Travellers are beginning to better understand that travel search sites like Wego are not OTAs,” he said. “The travel industry today places so much more emphasis on online bookings in a diverse marketplace, which is the reason we founded Wego, where you’re able to view hundreds of direct hotel rates as well as the variety of prices offered by OTAs, displayed on one site.”

“If there’s not a great deal of difference between an OTA and direct hotel rate, I’d advise to go with the hotel direct. There are small advantages in these cases with less onerous booking restrictions, more flexible cancellation processes, and yes, no booking fees.”

“Do your research and you too could spend the savings on lavish room service, or even cover the cost of an extra airfare for a special someone,” Hewett concluded.

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