May 9th, 2016
With the surge in popularity of metasearch, rate parity is more important than ever in hotels’ ongoing battle to grow their direct bookings. 80 DAYS currently support over 300 hotels on our metasearch programme, feeding rates and availability to Google and Trip Advisor amongst others.
We thought it would be interesting to see if we can draw any correlation between rate parity and performance.
So, what is rate parity?
Put simply, rate parity is providing consistent rates across all distribution channels. This means that no matter where you book your hotel room, whether it is via Booking.com, Expedia or with the hotel directly you will get the same room rate.
What does this mean for Metasearch?
Metasearch provides the user with real-time rate comparisons from multiple vendors (see below). This means that a variety of sources for the booking are instantly comparable, and therefore any disparities become immediately obvious.
How do we measure parity?
Our metasearch programme has rate parity checking functionality built in, which means we automatically check rates on a daily basis across multiple channels. We then measure parity on a percentage basis i.e. 90% parity means that over a given period, the hotel achieves rate parity for 90% of all rate availability requests.
We collated and analysed the data from over 200 hotels on our metasearch programme to get a better understanding of what kind of impact rate parity has on performance. The trial was conducted over a 90 day period from the 1st of January 2016
|Measurement||Top 15%||Bottom 15%|
|Return on Ad Spend (ROAS / ROI)||88% Parity||38% Parity|
|Cost Per Click||$1.87||$2.52|
The results of the research show a strong and direct correlation between rate parity and performance:
- The top 15% of hotels in terms of ROI achieved parity on average 88% of the time whilst the bottom 15% achieved an average of 38%.
- There are many factors that can effect Cost Per Click (CPC), but we found that on some channels such as Google, rate parity has a direct impact on this. Looking at the same dataset the top 15% paid an average CPC $1.87 whilst the bottom 15% paid an average CPC $2.52.
Let’s take one hotel as an example of how even the slightest change in rates can affect the revenue. Below is a graph showing the rate parity score (in red) and revenue (in green) for a luxury city hotel in Europe.
You can see that when the rates are out of parity for more than 15% of the time, revenue decreases or stops altogether. However, when there is rate parity 95% of the time or more, it really helps drive revenue. To summarise, you’re 4 times more likely to convert if you have 90%+ rate parity. This finding makes it vitally important that you manage your rates before signing up to metasearch.
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