The end of hotel price parity

When I was applying at booking.com I read that one of their success factors is price parity. Their contracts with the hotels state that the hotel can’t offer a lower price anywhere else.

This price parity is what makes them able to offer “best price guarantee”, refunding users the difference if they find the same room with the same conditions cheaper anywhere else.

However, this recently became under scrutiny by the European Union. Some countries ruled it is illegal and anti competition, giving hotels the freedom to offer cheaper price on their website.

I am working recently on a side project that I will announce later, this project involves visiting many hotel websites. I noticed the following:

  • Parity is dead. Almost all hotels offer a cheaper price if you book directly through them. The ranges are between 5% up to 20%, with 10% being the most number I saw.
  • Consolidation is happening across the board. Smaller hotels are being swallowed by bigger chains. Each chain has its different brands for different price segments. One example for this is the Ibis and the NH chains. From budget to 5 stars.
  • This one is more of a question than an observation: is there a chance for a no commission, software as a service OTA? The current problem hotels have is that they are not tech savvy, and consumers are lazy to have an account, and put the credit card on every hotel website they book. Maybe there is an opportunity for the Shopify of hotels with single user management system, and no commission model.
  • Islam Hassan

    What would be the alternative business model if there is no commission?

    • Software as a service. Subscription based for example.