Rate Parity vs. Rate Integrity—What is Rate Integrity?

Oct 20, 10 | 1:58 am

By Jean Francois Mourier, CEO, REVPAR GURU

Rate parity and rate integrity are both practices hoteliers use when selling their hotel rooms. Rate parity can be defined as maintaining consistent rates for the same product in all online distribution channels-Expedia, Orbitz, Hotwire, etc.-regardless of what commission the OTA makes. Rate parity can ensure an even playing field among all channels and protects a hotel's relationships with its partners, as no channel is being favored over another one. Rate parity can also allow a hotelier to evaluate its partnership with an OTA within a given time frame and allow them to make conclusions as to if and how the hotel should continue a business relationship with a given OTA.

It seems the concept of rate integrity, however, isn't as clear cut as that of rate parity.  By definition the word integrity is regarded as "the quality of having an intuitive sense of honesty and truthfulness in regard to the motivations for one's actions." So it makes sense that when it comes to each hotelier's opinion, the picture of rate integrity might change a bit across the board. For instance, many would argue that rate integrity is simply trust in the fair price of your room. If a hotelier honestly feels that their hotel's room rate coincides with the level of cleanliness, customer service, location and available amenities of the property, then he or she is practicing rate integrity.

Meanwhile, rate integrity is also identified as justifying price discounts to ensure a hotel isn't slashing rates for no reason. For instance, if a customer paid less for a hotel room, it should follow that the person booked an advanced purchase rate that is cheaper because it is non-refundable; or if a person got a 10% discount, it should be because they have a membership card or met some other qualifying standard. This way, if two guests find out what the other paid, there will be a factor that justifies the price difference between them. A hotelier should also avoid slashing rates as it becomes closer to a date in question. This will avoid complaints from customers who may have paid one price when booking early and now see that the rate for the same room type has unexplainably decreased. This is why it is critical to understand the market and set a price point to create a base, and then work from there.

Some would even say that rate parity and rate integrity go hand-in-hand. When a hotel effectively controls rate parity, rate integrity is assured, as not only is there a fair ground among the hotel and its partnering travel agencies, online companies, distribution partners, and hotel franchisors, the consumer can also be confident he or she is getting a fair price and won't be afraid of booking only to find there was a better rate through another channel they were not aware of.

The bottom line is that since rate integrity isn't something concrete, it is the hotelier that must have integrity in mind when setting their rates. Whether it's maintaining integrity through your rate parity, by justifying price discounts, avoiding price slashes, or a combination of all these practices, it is important for hoteliers to have a rational rate structure which they use consistently throughout their business plan.

Hoteliers can achieve a rational rate structure with hotel revenue management technology. This type of software can enable hoteliers and hotel revenue managers to manage their room inventory and pricing by examining supply, demand, and competitor pricing in real-time. In addition to assisting a hotel in maintaining its rate parity and integrity, these revenue management systems can automatically make price adjustments, update online distribution channels, and place your hotel in the ideal OTA page position to optimize bookings. This will always ensure a fair price for the consumers while ensuring the hotelier is always making strategic and proactive decisions in order to guarantee they are running a profitable business operation.


About REVPAR GURU

REVPAR GURU provides hotels around the world with an alternative revenue management software solution, designed to deliver maximum bookings and profits. As REVPAR GURU's custom-designed Yield Dynamic Price Engine is the only real-time revenue management software available on the market, it meets the rapidly changing needs of hotels in a very demanding business environment.  REVPAR GURU's  solution offers dynamic rate optimization, real-time pricing, integrated internet and extranet yield channel management and GDS sales distribution, to increase a hotel's RevPAR intelligently and effectively, while maintaining rate integrity and automated rate parity. Since 2004, REVPAR GURU's software solution has been used by hotels worldwide to increase occupancy and RevPAR.  Headquartered in Miami, Florida, additional information can be found at www.revparguru.com or by calling +1.786.478.3500.