In a fragmented marketplace, one of the major challenges facing hoteliers is ensuring distributors sell their rates according to the contracted conditions.
As a response to this issue, Hotelbeds has introduced a range of initiatives to safeguard rate integrity in our sector.
Why is rate integrity important?
Rate integrity ensures a culture of trust in the marketplace. To guarantee competitive positioning and operational profitability, hoteliers have to ensure that the distributor is fully aligned to its rate strategy, while travel sellers need to honour contracted rates.
- Protects the trust essential to maintaining a successful marketplace
- Ensures an equal playing field for all participants
- Secures operational profitability for all parties
Misusing rates affects the whole market
A major issue for the industry is that the same room can sell at a wholesale net rate or a retail gross rate. So, trust between parties is essential to avoid channel conflicts and transactional partners attempting to gain an unfair advantage by discounting prices below the contracted best available rate (BAR).
Hotelbeds is leading the way in preventing sellers from promoting discounted prices in unapproved channels. That even goes as far as terminating relationships with repeat offenders.
“Amoma is one key example of us making sure that we’ve been significantly reducing our business with clients that hoteliers consider not to be generating value,”
Carlos Muñoz, Hotelbeds
How bedbanks promote rate integrity
Investments in technology
Through the development of new rules-based technologies, Hotelbeds is taking a leading role in identifying malpractice before it has a chance to impact the marketplace.
By dedicating whole teams to tracking compliance metrics and imposing stricter policies, bedbanks can prevent the proliferation of bad behaviour.
Responsible relationship management with partners
If sacrificing revenue is what it takes to rid the sector of duplicitous practice, then Hotelbeds is prepared to do that. In fact, Hotelbeds recently stopped working with companies misusing rates, which resulted in a reduction in annual sales volume of around 300 Million Euros.
Strict rate integrity policies
Increasingly, bedbanks are stipulating contractual terms that prohibit their partners misusing rates. While legitimate hotel revenue management errors do occasionally occur, Hotelbeds has introduced a strict ‘three-strike’ policy for channels that consistently violate distribution rules. We proactively exclude travel buyers from our network that repeatedly violate the terms of their contract.
“Any online travel agent that distributes content intended for offline in an online B2C sales channel, just three times, will find themselves cut-off from distributing that hotel via Hotelbeds.”
Carlos Muñoz, Hotelbeds
What hoteliers can do to maintain rate integrity
Communicate contractual responsibility
Rate discrepancies can arise during the onward distribution of group, unbundled or region-specific rates if conditions are not stipulated early on.
That’s why defining opaque pricing agreements is crucial to avoid any misinterpretations of a contract, which could ultimately affect trust in the marketplace for all participating providers and suppliers.
Practice and monitor pricing compliance
To foster confidence in the marketplace, hotels also need to take responsibility for auditing pricing compliance. And while it’s important to assume good intent, if hoteliers do suspect rate misuse, it’s crucial to verify and identify the bad actors.
It’s worth noting that these types of violations are generally not isolated to just one property, so others are likely. And again, the knock-on effect is the erosion of trust in our industry.
The Hotelbeds commitment to detecting and deterring rates misuse
Thanks to the development of market-leading automated technologies unavailable elsewhere, Hotelbeds is able to segment and accurately monitor how contracted products are distributed. These investments in technology, infrastructure and resources form part of our wider pledge to rid the marketplace of bad practice.
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