Finance

Hotels should continue reducing unnecessary rate leakage because it protects pricing integrity, strengthens partner relationships and improves profitability. But pursuing absolute zero leakage is increasingly unrealistic in a fragmented global distribution ecosystem.

Zero rate leakage is a bit of a fantasy: a room that never appears cheaper elsewhere.Distribution is a network. A room moves from hotel to wholesaler to bedbank to affiliate to OTA, and every layer that is added also removes visibility.

Asking whether hoteliers should stop chasing rate leakage suggests accepting contract breaches as a routine cost of doing business. The issue isn't technological complexity or API caching—it is a direct breach of written commercial agreements.Historically, wholesale rates resided in printed brochures as opaque, bundled packages—a volume trade-off generating incremental demand without exposing room pricing.What changed?

Visa Destinations is an interesting development, but it's too early to call it a major shift in hotel distribution. Visa has huge global reach through its billions of payment cards, giving it the potential to become a significant travel booking platform.

I wrote some time back about the emergence of banking as a genuine alternative to traditional distribution and their depth of customer intelligence as compared to other business types competing for the same customer.It’s a mistake to look at this strictly through the lens of Visa's direct customer relationships or draw parallels to Amazon's travel missteps.

Visa's 4.3 billion cards in circulation miss something AMEX has: an aspirational brand cardholders actively choose because of what it says about them.That distinction matters more than scale here. Amex built travel credibility over decades with their concierge desks, Centurion Lounges, curated hotel collections...

The most significant impact might not be operational, but psychological. Why? Because it's the hotel industry's fault. Let me explain:For years, hotels have trained guests to treat bookings as placeholders: reserve today, decide later.

In my view, the Full Prepayment Model is not the future of hospitality. While full prepayment has been practiced for decades for charter vacations, extended beach vacations and unique experiences like safari tours, it’s definitely not user friendly as far as plain hotel bookings are concerned. Merchant bookings - fully prepaid bookings - at both Expedia and Booking now represent over 70% of the total gross bookings. Improved cash flow, controlling the price the customer pays, opportunities to bundle hotel stays with air, transportation and experiences are some of the reasons for the OTA preferences of the merchant model.

The biggest impact of full prepayment is that booking a hotel becomes a much bigger commitment for guests.Hotels benefit from fewer cancellations, better cash flow, and more predictable occupancy.But guests may book less often or take longer to decide because they must pay upfront.Trusted brands like Marriott International and Booking.com may benefit most, while smaller hotels could struggle more with guest trust.BNPL services may become very important because they make upfront payment feel more flexible and less risky.

In many ways I look at this as an extension of Expedia. I suppose another clip on the ticket on the way through, which I can only imagine will make an Uber hotel booking more expensive.Is more distribution opportunities a good thing?

The big winner here is Expedia, adding another marquee player to its affiliate network. Uber will join other significant affiliates of Expedia, together with Chase Travel, Walmart Plus Travel and numerous airlines, tour operators, cruise lines, etc.

For hotels already locked into aggressive distribution deals with Expedia, this is a warning signal, as it reinforces intermediary power at precisely the moment the industry has spent years trying to rebuild the direct guest relationship.

The Cloudbeds data is striking, but let’s be honest — a 21.8% OTA cancellation rate isn’t just a distribution problem. It’s a relationship problem. OTA bookers aren’t disloyal by nature; they’re simply responding rationally to a system that hotels helped create. When a guest can book a hotel through five channels and find five slightly different prices, they begin to treat their reservation like a placeholder, not a commitment.

What can hotels do to decrease their cancellation rates? Maintain Rate Parity! If travelers find a lower rate for your hotel on the OTAs, they can cancel their direct booking and be tempted to book your hotel on the OTA or be lured away by a competitor with lower rate or better value. Maintain Market Parity!

High cancellation rates – particularly for OTA bookings – are a growing challenge for hotels. They make planning harder, put pressure on rates, and often lead to last‑minute discounting that hurts overall performance.

This stage of AI evolution is not just predictable, it was inevitable as it addresses the very natural consumer expectation to be able to complete the transaction within the same app without having to click out. UCP in itself is not the biggest disruptor (AI search is).

Google's Universal Commerce Protocol (UCP) absolutely could pave the way for a meaningful shift in hotel distribution in the next 24-36 months. Its impact will depend heavily on both technological readiness and traveler adoption.

There's a significant gap between what's technically possible and what consumers will actually adopt, especially for high-involvement decisions like hotel bookings. For commodity purchases (cables, everyday items), delegating the entire process to an AI agent makes sense, but hotel bookings for holidays is a different story.

This is a pivotal shift. The issue is no longer which channels we use, but who controls the guest narrative and the data behind it. Hotels will not win by fighting OTAs on scale or ad spend. We win by aligning revenue, marketing, and sales around a single guest intelligence strategy using data to drive relevance, not just reach.

OpenAI, Google and Perplexity will reshape this landscape again. Nobody knows how exactly but 2 years from now the picture will be very different.

Stop playing the OTA game—change the game with the product. Yes, third parties are taking control of search, booking flows, and traveler data—but copying their playbook won't reclaim the guest relationship. If you try to "out-CRM" Expedia or "out-loyalty" Airbnb, you're choosing a scale game you can't win.

Hotels don't need another mega OTA, rather, they need partners who create real value. Airbnb's shift into hotels is less innovation and more defense. With Booking.com dominating STR volume and commissions rising, Airbnb is simply repositioning to stay competitive.

To be fair, one could argue Airbnb has already been functioning as an OTA for years. It facilitates transactions, controls the marketplace, shapes pricing behavior, and now they are onboarding more hotels and aligning its commission structure.

I believe we're at the point where it really doesn't matter anymore how many OTAs we have. It's gotten so bad for hotels that it almost can't get any worse — and it barely matters which one of them is draining our margins or taking over our guests.

Brilliantly articulated. This is exactly where the conversation needs to be moving forward. The era of chasing topline numbers is over, today's commercial leaders are being judged by flow-through intelligence, not occupancy percentages.

We've been having these conversations for about 20 years now. A lot has been said and published on this topic, including my own articles, podcast episodes, webinars, and even dedicated chapters in my last two books. The answer, at least to me, is obvious: until RMS providers build true profit optimization capabilities into their products (which requires proper data flow for the missing pieces of the equation), we're not going to move forward.

The ambitious vision for Total Profit Optimization is not a destination we are equipped to reach today. It's not a pipedream, but a strategic challenge demanding a phased, constructive approach. The core issue is a structural disconnect stemming from the historical focus on Rooms: The Talent Evolution: We currently possess excellent Rooms Optimizers, whose skill sets were sharpened by focused toolsets and market dynamics.

The shift toward experience-based booking is absolutely transforming the game. AI can finally solve the paradox of choice. Hotels can now showcase everything they offer but in a way that's targeted and relevant. Don't sell me a romantic getaway when I'm traveling alone.

There is a massive industry gap here. Full stop. Discussion about this capability in the industry is topical. Those in a position to enable it are few, if even thinking about it. Packages are a clumsy solution to the underlying problem of being able to successfully deliver rooms digitally.

If the game has shifted...so must our KPIs. Today's revenue leaders must zoom out and focus on TRevPAR, capturing not just what happens in the room, but around it. Whether you're luxury or budget, you can take advantage of experiential revenue, something that thanks to digitalization, every hotel can play (and not only ultra-luxury resorts).

If the real question is about skills, mindset, and capabilities, then here's my take: Skills: a Revenue Manager today must think strategically, not just tactically. Revenue management is about defining where the business should go in terms of product and revenue in the next 3–5 years.

A broader skill set — especially in marketing — is becoming increasingly beneficial. Since specialized tasks can now be handled perfectly by AI, commercial roles are moving closer together. This shift makes broad, cross-functional skills more important than ever.

The Revenue Manager we need today looks very different from the one many hotels still have in place. The role can no longer be defined by Excel spreadsheets and static reports. The markets move too fast, the data is too complex, and the opportunities are too big to leave in the hands of manual processes.

"Velocity analytics" and "Anomaly detection" sound like cutting-edge tech, but these are just fancy names for basic common sense: watching your booking pace and noticing when something's off. The bigger issue is our industry's obsession with historical forecasting.

This is one of the greatest opportunities the hotel industry has ever faced. Forecasting should no longer be treated as a static spreadsheet, it's more like a live stock market dashboard, where dozens of variables are in motion and projections shift by the hour.

As a seasoned Revenue and Profit Optimization professional I would like to reitarate (which I have already expressed in my book Hospitality 2.0 and other publications): travel demand has always been uncertain, and history never repeats itself.

Since when it's a good thing for the government to determine commissions in the private sector? Commissions are charged in many industries: from insurance to sales to real estate. Why doesn't the government regulate them all? And why decrease the commissions by 25% and not by 19.5% or 26.8%?

I firmly agree that, in many cases, the fees are excessive and that OTA's have exploited the industry's vulnerabilities—particularly targeting independent hotels and softer brands. That said, I do not believe government intervention in commission structures is the answer.

It certainly sounds appealing at first. Let's protect the poor hotels from high commissions but if we've learned anything from economics it's that government price controls tend to create more problems than they solve. Take the example of rent controls.

I was shocked by the claim that there were hoteliers linking their property websites' "Book Now" buttons directly to the OTAs. In hospitality we had a few cases like these back in the year 2000. But now, 25 years later? First, direct bookings are cheaper than OTA bookings.

OTAs are not a strategy - they're a costly crutch. The idea of abandoning direct online distribution in favor of exclusive reliance on OTAs is not only shortsighted — it's dangerous. OTAs are useful tools in a diversified distribution strategy when demand is not strong, but surrendering full control to them is a fast track to eroded margins and loss of brand equity.

Handing your business over to a lottery outcome. Sounds like a great idea! One should not outsource something mission critical to the business. If selling product isn't mission critical, then I suppose knock yourself out! There is no doubt that competing is a tough business.

This is not the first attempt for an ill-conceived differentiated pricing by the OTAs. 15 years ago Orbitz was caught jacking up prices for Apple computer and laptop users under the presumption that Apple users were more affluent than PC users.

This research is indeed intriguing. As a product manager for Lighthouse's parity management solution, I've seen firsthand how hotels use extranet promotions to offer location-specific and platform-specific discounts. However, this study reveals a fundamentally different scenario.

Why not? There are many across industry examples where location and socio-demographics impact pricing for products and services. A few brief examples - Fuel - Drive around your own town and you will find vast differences. Not to mention long weekends.

In my view, last-minute discounting is a super lazy and rookie approach to revenue management and a sure downward spiral to hotel insolvency. One question: why airlines and car rental companies never engage in last-minute discounting?

No actions that drive business to OTAs away from direct channels are good for hotels. It's a simple concept. OTAs have been very creative in finding ways to train the consumer to choose their booking channels over hotels' own websites and this is just another attempt to do the same.

Last-minute discounting is a double-edged sword for hoteliers. It can help fill unsold inventory, but it also carries significant risks that can undermine a hotel's broader revenue strategy and brand perception. From a revenue perspective, unsold rooms are a perishable asset, and this type of policy can be useful to sell those rooms.

I believe rate parity is essential for transparency and trust with our guests. It ensures consistent rates across all third-party channels, avoiding confusion and maintaining our brand's reputation. While we have the flexibility to offer special rates on our own website (a channel we fully own), rate parity helps us manage distribution more effectively with OTAs and other third parties we don't fully control (which we don't own).

I believe that hotels should have the freedom to set different rates across their distribution channels, including OTAs, without being bound by rate parity agreements. Firstly, allowing hotels to set their own rates enables them to respond more dynamically to market conditions and tailor pricing strategies to different customer segments.

Rate parity is non-sense and the RTI ( Retun time invested.) is always negative. here is why: 1. Hotels cannot answer how much additional business they got because of disparity - so easy to throw rocks as to how much money "might have been lost" vs 2.

I don't think this is a good move from Booking.com as indeed advance purchase rates (with no refunds or cancellations) have been a useful tool to attract budget-conscious guests and ensure steady cash flow for hotels. Nowadays, guests are even more price sensitive so by removing completely prepaid rates at a discount, we (they) may lose some customers directly.

In some ways it appers much like the old model of travel agent relationships and vouchers, where the hotel received the funds from the agent after the guest had stayed and submitted their voucher for payment through the accounts receivable process.

Hotel advanced booking/pre-paid rates are typically 10%-20% below BAR (Best Available Rate). These rates have always been an important strategy to put as much business on the books and to decrease cancellation rates plaguing the industry for years, reaching as high as 50% in some destinations.