In the hotel industry, “parity rate” refers to the practice of maintaining consistent pricing across all distribution channels, such as the hotel’s own website, online travel agencies (OTAs), and other third-party booking channels. Essentially, it means that the hotel’s room rates must be the same regardless of where a customer makes a booking.
The purpose of enforcing parity rates is to ensure fairness in competition and protect the hotel’s revenue. By ensuring that all distribution channels offer the same rate, hotels can prevent price undercutting and avoid confusion among customers who may see different rates for the same room on different platforms. Parity rates also help hotels maintain control over their brand image and pricing strategy.
In some cases, hotels may offer lower rates for direct bookings made on their own website as an incentive to book directly with the hotel. However, this discounted rate must still be consistent with the parity rate for that room on other distribution channels. The only way one can receive a hotel discount is to be part of a “CUG” membership-based program. Travel Membership clubs negotiate deals directly with Hotels and put those discounts behind locked doors so the public can’t access them. Offering this type of rate protection allows hoteliers to offer deeper discounts to private membership clubs.
Parity rate agreements are often part of contracts between hotels and OTAs or other third-party booking channels. However, the practice has been subject to legal challenges in some countries, as some authorities argue that it limits competition and consumer choice.
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