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What Small Business Travelers Need to Know About Hotel Rate Parity

December 22nd, 2016 /

Tell me if this scenario sounds familiar: it’s time to book a hotel for your next business trip, and you’re not looking forward to it. You sit down and spend half an hour browsing search engines, visiting upwards of fifteen sites. After a while, the parade of choices begins to seem identical. You finally pick one just to get it over with.

The truth is, there’s not much difference between hotel booking platforms. It’s easy to waste a lot of time looking for a deal without coming out ahead. Why? Because of rate parity. If you’re a small business owner who’s frequently on the road, you need to understand what rate parity is, how it impacts you and your employees, and how to work around it.

hotel rate parity was never really intended to benefit small business travelers

Understanding rate parity means mastering the art getting a real hotel discount. Image by Flickr user Prayitno (CC BY 2.0)

What is Rate Parity?

Rate parity is unique to the hotel industry. It’s basically an “equal access” policy that online travel agencies like Expedia, Priceline, and Orbitz include in their contracts with hotels.

If you’re a hotel that teams up with an online travel agency (OTA), you get increased exposure and a marketing boost, but in return, you must agree to publish the same going rate for any given room across all of your booking platforms.

Here’s the rationale: OTAs don’t want hotels to set lower rates on their home sites and draw customers away. And on the flip side, hotels don’t want to be undercut by OTAs, who already take a commission out of the rate price and have a significant amount of negotiating power. Rate parity keeps prices stable and helps both parties establish customer trust.

But for consumers, rate parity means that when you look for a hotel room, you’ll find basically the same price on every platform (with a few exceptions—we’ll look at those in a minute).

While rate parity seems to be on its way out in Europe, I don’t see a similar shift occurring in the United States anytime soon. We’ve debated changing rate parity clauses for years without any real follow-through, and as a whole, it is effective at regulating hotel prices—exactly what it was designed for. Industry lobbyists aren’t likely to push for a remodel of a functioning system. So as a small business owner, your strategy should be to work around rate parity rather than battle against it.

large corporations can leverage a corporate rate and avoid hotel rate parity restraints

Relying on OTA discounts means gambling with quality—you never quite know what you’ll get. Image credit: Flickr user Sean MacEntee (CC BY 2.0)

Why Some Hotel Deals Look Better Than Others

In truth, there are some slight price differences between various booking platforms. A hotel might choose to run a flash sale on an OTA but require full payment upfront. Or you might purchase a hotel room blindly, knowing the general location and the star rating but nothing else. And if you travel frequently for business, not knowing exactly what your room will be like or whether you’ll have reliable WiFi or a way to alter your reservation usually isn’t worth the trade-off of this small discount.

Even advertised “40% off” deals aren’t always helpful for small businesses. You might enter the site only to learn that the OTA has just one or two properties out of hundreds that are actually being discounted—which is unlikely to do you much good if you’ve already got a set itinerary in a specific city.

Similar to being familiar with airline fare codes when you fly, it’s basically important to read the fine print before you book your room. If you spot an above-average discount, you’re generally giving something up in return.

Corporate Rates: Where the True Discounts Lie

Of course, corporations with thousands of employees are the exception to the rate parity rule: they have the volume to negotiate directly with hotel chains for better prices. Because the resulting rates are never published, these companies are able to skirt the restrictions of rate parity and hold out for much steeper discounts.

This system works well for large companies—and for hotels and OTAs—but it leaves small businesses in an uncomfortable position: you don’t have access to corporate rates because you lack negotiating power, but you likely need more consistent quality than what’s guaranteed by online flash sales. This means you’re stuck with rate parity, a system that was never intended to benefit you.

I watched this situation play out repeatedly during my years in the hotel industry, and it always seemed blatantly unfair. In an attempt to level the playing field, JetLux Hotels was born.

 

hotel rate parity doesn't have to make travel difficult

JetLux is in the business of championing the little guy. Image credit: JetLux Hotels

Giving Small Businesses Access to the Corporate Rate

JetLux is a membership service designed to finally give small businesses access to the corporate rate. Using the collective bargaining power of our members, we negotiate with hotels for anything from 15-40% off rate parity prices. These discounts apply both to luxury hotel chains and to boutique properties across the country, providing small business owners with a whole lot of options. (Even employees from large companies are sometimes restricted to booking with major hotel chains.)

Because our prices are never openly published and only a limited audience (our members) will see them, we’re able to skirt rate parity restrictions in the same way that large corporations do, ensuring year-round discounts without requiring you to sacrifice quality or comfort.

If you’re interested in looking beyond rate parity to find true value for your small business, give JetLux a try. Reach out to us directly if you have further questions about how we can help you move from the confines of rate parity and into the world of the elite.

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