Bookings through OTAs are not cheaper due to rate parity which is a legal agreement between hotels and OTAs, say hoteliers
by HARIZAH KAMEL/ pic by BLOOMBERG
THERE is no huge difference in hotel rates if customers were to book rooms through online travel agencies (OTAs) or make direct bookings to the hotel itself amid the Covid-19 season.
Malaysian Association of Hotels (MAH) CEO Yap Lip Seng, however, said bookings through OTAs are not cheaper due to rate parity.
“OTAs are not cheaper. The parity contract simply says hotels cannot sell cheaper, but the prices can be at the same rate. This is where hotel direct bookings are an advantage as the hotels can add value to the booking because they own the operations.
“It is very subjective, as individual OTA would run its own campaigns, but we always recommend booking directly with hotels where customers can get first-hand promotions and added value benefits,” he told The Malaysian Reserve (TMR) recently.
Between hotels and OTAs, rate parity is a legal agreement where hotels use the same rate and terms for a particular room regardless of the distribution channel.
Room prices can regularly change making the exact rate flexible, but must always remain the same across all distribution channels be it direct booking or through OTAs.
Well-known OTAs in the industry are Booking Holdings Inc, which owns and operates Booking.com, Priceline.com and Agoda. com, and Expedia Group that operates Hotels.com and Trivago NV.
According to hospitality in formation technology solutions provider STAAH Ltd’s annual round-up, last year’s top online channels in Malaysia saw Agoda.com leading the pack, followed by Booking.com, Expedia and Traveloka.
The result is based on confirmed room nights booked on Malaysian properties through STAAH’s cloudbased channel management and booking engine between Jan 1 and Dec 31, 2019.
The Malaysia Budget Hotel Association president Emmy Suraya Hussein said the rates also depend on the allotment for the OTA.
“Sometimes the OTA wants the best rates if the allotment is big and many. Normally, this is for four- and five-star hotels.
“For budget hotels, the rates will be the same with OTAs or with the hotels, and sometimes cheaper at the hotel itself,” she said.
Meanwhile, the Malaysian Association of Hotel Owners ED Shaharuddin M Saaid said hotels might offer better or cheaper rates than OTAs to attract guests, but there is no clear figure.
“During this time, some hotels might want to do their own promotion, so they might offer better rates. We have not got a clear picture of this because maybe some hotels are not doing it, but generally through OTAs would be cheaper, even without the crisis,” he told TMR.
Local hotels have been slashing room rates up to 70% in an effort to attract customers and survive the Covid-19 drought that has put a halt to the industry.
However, the effort has not stop the unprecedented loss of RM66 million in revenue that translates to approximately 157,000 room booking cancellations recorded so far, according to MAH.
The cancellations are largely from the mainland China market, but there have been reports of cancellation from domestic market, Singapore, Hong Kong, Taiwan, Vietnam and Europe.
In a recent press briefing, Yap said South Korea cancellations have increased since the government issued a travel advisory against Malaysia.
Yesterday, South Korean authorities reported 169 new cases (at press time), taking the tally to 1,146, the largest outbreak outside mainland China.
A majority of the jumped was linked to a religious sect in Daegu, while more than 100 cases are related to a hospital in Cheongdo County.
For now, the governments of Singapore and the Philippines have block entries to visitors from Cheongdo and Daegu, both located in the North Gyeongsang Province.