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Rising Aggression in OTA Pricing Strategies Affects Independent Hotels – Image Credit Unsplash
123Compare.me’s World Parity Report for April indicates that independent hotels and smaller chains face greater pressure from Online Travel Agencies (OTAs) when their rates surpass the market average. This pressure becomes particularly evident with non-major OTAs, emphasizing the need for enhanced monitoring of these intermediaries.
A key finding of the World Parity Report indicates that independent hotels face increased pressure from non-major OTAs when their prices exceed the average market rates. The lose rate, which refers to a hotel’s price loss relative to the market, increases when a hotel’s price is above the average market rate.
BML Average
The Beat, Meet, and Lose (BML) Average for April reached 35%, a 5-point increase compared to March. In 75% of cases, at least one OTA displays a lower price than the hotel’s website.
OTA Pricing Strategies
Major OTAs, like Booking and Expedia, tend to apply less aggressive pricing tactics than other intermediaries. However, non-major OTAs show a different pattern, with their loss rate increasing notably when hotel prices exceed the market average.
Impact on Different Hotel Types
When segmented by hotel type, the most aggressive behaviors are observed in independent hotels. When prices are more than 40% above the market average, the loss rate for these OTAs reaches 41.8%, compared to 34.0% for major OTAs.
Expert Opinions
Industry experts like Joe Pettigrew, Chief Commercial Officer (CCO) at L+R Hotels, suggest that higher-priced hotels often experience more rate parity issues, particularly from tertiary OTAs undercutting them. This is likely due to the complexity of their distribution networks.
Price Evolution Analysis
Regarding price trends, direct prices in Q1 2025 were 6.3% higher than in Q1 2024. This suggests an upward trend in prices, likely reflecting sustained demand growth.
Conclusion
Overall, the April World Parity Report underscores the impact of aggressive pricing strategies by OTAs, particularly on independent hotels. The findings suggest that these hotels need to monitor their pricing strategies and the rates offered by OTAs closely.
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