Question 1

What is Rate Parity?

Accepted Answer

Rate parity is a legal agreement between a hotel and an Online Travel Agency (OTA) that requires the hotel to offer the same rate for the same room on all its distribution channels, including its own website. While intended to prevent hotels from undercutting the OTA, it can make it challenging to drive direct bookings.

Question 2

What is the average commission for an OTA?

Accepted Answer

OTA commissions vary widely but typically range from 15% to 25% or even higher. The exact percentage depends on the OTA, the hotel's size and location, and the level of visibility the OTA provides.

Question 3

How do I calculate the cost of a direct booking?

Accepted Answer

The cost of a direct booking (also known as Customer Acquisition Cost for direct channels) includes all expenses related to driving that booking. This can include a portion of your marketing budget (e.g., Google Ads, social media), website maintenance fees, and the transaction fee for your booking engine. It's an estimate, but crucial for a fair comparison.

Question 4

If direct is more profitable, why use OTAs at all?

Accepted Answer

OTAs provide immense marketing reach and visibility (the 'billboard effect'), introducing your hotel to a global audience you might not otherwise reach. A healthy distribution strategy involves a mix of direct bookings and OTA bookings to maximize both occupancy and profitability.

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