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ENIn the hotel industry, room rates are more than just numbers displayed on websites or OTAs; they are a "control tool" that directly impacts profitability and customer relationships. A common mistake, often underestimated, is applying the same rates and offers across all distribution channels – from OTAs and travel agencies to the hotel's direct website.
At first glance, maintaining consistent pricing seems safe: it avoids conflicts and upholds a transparent, uniform image. However, in reality, this uniformity limits the hotel's ability to optimise revenue, misses opportunities to leverage the unique characteristics of each channel, and inadvertently "hands over" potential profits to intermediaries.
Why do hotels maintain a single price across all channels?
In reality, the fact that many hotels still opt for a "one price for all" solution is not accidental, but stems from various factors that are both restrictive and habitual in management. There are three main notable reasons: Firstly – Concerns about violating OTA rate parity policies. Major OTAs like Booking.com, Expedia, and Agoda all impose "rate parity" clauses – meaning hotels cannot publicly offer lower prices on other channels (including their official website). If discovered, hotels may face reduced visibility rankings or even have their listings suspended on the platform. This is why many managers choose the "safe" option: maintaining a consistent price across all channels, not daring to be flexible within permissible limits. This fear of violation sometimes outweighs the desire to optimise profits, putting hotels in a passive position.
Secondly – Limitations in personnel and management tools. Channel-specific pricing is not just about changing numbers; it requires technology systems (Channel Manager, RMS) and strict control processes. For small to medium-sized hotels, investing in modern technology and training dedicated revenue management personnel (Revenue Manager) is often considered costly. As a result, many establishments opt for a manual approach: setting a single, unified price, which is easy to operate and reduces the risk of errors. However, this immediate "convenience" causes hotels to lose the ability to maximise the value of each distribution channel.
Third – Failure to recognise the strategic role of direct channels. With OTAs accounting for a large proportion of bookings, many hotels automatically view their own websites as merely a "secondary channel." Some even invest almost nothing in the online booking experience, loyalty programmes, or marketing tools specifically for direct channels. This creates a vicious cycle: the less investment in direct channels, the less incentive guests have to book through them, leading to OTAs gaining increasing dominance. In the long run, hotels gradually become dependent on OTAs, failing to realise they are missing opportunities to build a loyal customer base – the foundation for sustainable growth.
Consequences – When uniform pricing becomes a "double-edged sword"
Adopting a monotonous pricing strategy may seem like a safe choice, but it actually brings many negative consequences for hotels. Loss of direct booking incentive. When the price on the hotel's official website is no different from OTAs, customers will prioritise booking through OTAs to enjoy additional benefits such as reward programmes, flexible cancellation policies, or promotions from the platform itself. This means the hotel has to pay an additional 15 – 25% commission to the OTA, significantly reducing net revenue. In other words, the hotel is "handing over" a portion of its inherent profit to an intermediary. The larger the proportion of OTA revenue, the higher the commission costs (sales costs) proportionally. This is only visible in the P&L statement. Loss of opportunity to build direct customer relationships. For OTA bookings, hotels receive limited information and often cannot proactively re-market to guests after their stay. In contrast, direct channels open up many opportunities: collecting customer data, implementing personalised offers, and developing loyalty programmes. Neglecting direct channels means hotels cut off their ability to build a loyal customer base – the most stable and sustainable source of revenue.
Increased reliance on OTAs and potential imbalance between segments. When direct channels are not prioritised, OTAs naturally become the main "lifeline." This dependence causes hotels to lose their proactive control: prices, display rankings, and promotional campaigns are all influenced by OTA algorithms and policies. In the long run, hotels will fall into a passive position, unable to control guest flow or adjust pricing strategies as desired. Duetto once warned: "Without a channel strategy, hotels may be eroding their own profits without even knowing it." In reality, the short-term "safety" of maintaining a single price is precisely what hinders profitability and limits the hotel's long-term sustainable development.
Solution – Escaping the "one-price trap" with a flexible channel-specific pricing strategy
To escape this vicious cycle, hotels need to implement a flexible channel-specific pricing strategy – one that adheres to OTA rate parity regulations while optimising the net value from each booking. This does not mean completely abandoning price consistency, but rather "skillfully" leveraging each channel according to its specific characteristics, so that the ultimate profit for the hotel is maximised. Create non-financial incentives for direct channels. Undercutting OTA prices is a risky choice that can lead to hotels being downgraded in search rankings or warned by OTAs. A safer and smarter solution is to add "added value" for guests who book directly through the official website. For example, guests could receive complimentary airport transfers, a spa voucher worth a portion of the room cost, a complimentary dinner, or a special discount for loyalty members. These non-financial benefits do not violate parity but create a clear differentiation, motivating guests to choose direct channels instead of OTAs. In the long run, this helps hotels save on commission costs and strengthen relationships with customers from the very first step.
Leverage OTAs selectively. Instead of viewing OTAs as "competitors," hotels can transform them into supportive channels by utilising the features available on these platforms. For example, Agoda, Booking.com, Traveloka, Trip.com, and Expedia allow hotels to implement Mobile Rates (special offers for mobile users) or Genius Rates (for OTA loyalty members). Proactively applying or not applying additional promotional policies, such as mobile app booking promotions or member-exclusive rates, helps hotels increase bookings in the short term without disrupting the balance with other channels. However, it's crucial to remember that OTAs should be a supplementary tool, not the sole channel. "Selective" use means knowing when to use OTAs to boost sales (e.g., during off-peak seasons, periods of high vacancy) and when to retain rooms that can be sold through direct channels to optimise net profit. Allocate rationally based on each channel's cost. Every distribution channel has hidden costs in the form of commissions, discounts, or operational expenses. Therefore, hotels must view sales channels not just as sources of bookings, but also as "cost channels." The general principle is: high-cost channels (like OTAs) should only be used during periods of low occupancy or to reach new customer segments. Conversely, direct channels – which have the lowest costs – should be prioritised with the best offers to cultivate a loyal customer base, gradually reducing reliance on OTAs. This is a strategic move that helps hotels optimise long-term profits instead of chasing short-term sales.
Invest in revenue management systems and personnel. A channel-specific pricing strategy can only operate smoothly when the hotel has adequate tools and human resources to manage it. Channel Manager, CRS, and RMS systems help hotels adjust prices flexibly in real-time, avoiding errors common with manual updates. Furthermore, a professional Revenue Manager team will analyse data, forecast demand, and make optimal pricing allocation decisions for each channel. This is not just an investment cost, but a foundation for the hotel to transition to a professional revenue management model – a key factor for competitiveness in the modern hotel industry.
Conclusion – Diversify to optimise, rather than "monotonous" for safety
In an increasingly competitive landscape, a monolithic pricing strategy across all channels is a false sense of security. Hotels may avoid short-term price conflicts, but they also deprive themselves of the opportunity to maximise profits and build long-term customer relationships. The key to success lies in smart allocation, leveraging the unique characteristics of each channel, and consistently prioritising direct channels. This approach helps hotels reduce distribution costs, increase net revenue, and gain better control over customer relationships. As a pioneer in providing revenue management solutions, NewSun Hospitality offers a comprehensive ecosystem to help hotels develop effective channel strategies:
- Consulting on flexible channel-specific pricing models to optimise net value.
- Analysing OTA data, direct channels, and real-time market trends.
- Designing specific offer packages for each channel, ensuring both parity compliance and revenue maximisation.
???? Contact NewSun Hospitality today to escape the "one-price trap" and build a smart distribution strategy – where every channel is an opportunity, not a barrier. References
- duettocloud.com – “Channel strategy: Why one price across all channels reduces profitability”
- Booking.com – Mobile & Genius Rates guidelines
- STR – Distribution cost benchmarking report
