The Different Strategic Moves of Hotels to Deal with Online Travel Agencies

The Different Strategic Moves of Hotels to Deal with Online Travel Agencies

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Category: Travel and Tourism Essay
Subcategory: Hospitality and Tourism Management
Words: 643
Pages: 2

Rate parity is a legal agreement between the Online Travel Agencies (OTAs) and the hotel businesses to provide similar rates for the same room in the various distribution channels (Terence, p.1). OTAs regularly provide higher rates than the rate that a hotel can offer if a customer booked a room directly. The travel agencies play a vital role in ensuring connectivity as well as transparency in the tourism sector. They provide fast marketing of hotels locally as well as internationally through maximizing the businesses revenue. Despite that OTAs provide a lot of opportunities for hotels to trade globally, most of the hotel management are against the policy. The hotel's management is against Price Parity since it does not create a competitive grounds for the hotel sector. Additionally, the OTAs gain a high commission, and therefore they end up winning more money from both the customers as well as the hotels. Therefore, for the hotels to do away with the travel agencies, basic strategies such as distribution channel mix ought to be adopted.To begin with, some hotels are against the rate parity since the rate remains the same despite the times of economic crisis. For instance, during the periods of the high season, individuals in the hotel sector expect a rise in the price of rooms which is not the case. However, the parity rates prevent direct bookings of the rooms, and therefore the hotels cannot gain the loyalty of their clients as well as they cannot give discounts to their customers. Besides, the rates do not allow hotels to offer different prices for their rooms depending on the number of years the hotel has operated, the size of the hotel as well as the particular kind of rooms and services the hotel offers. However, health competition is deterred, and therefore the quality of services provided becomes substandard (Terence, p.3). Additionally, the commissions offered to the travel agencies may be increased for the agencies, and...

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