Is Rate Leakage a problem for hotels?
7 experts shared their view
Wholesalers who have negotiated discounted rates with the hotel under the pretext of needing wholesale rates to bundle with air or local activities, etc. into packages, and then leak the discounted rates "naked" online-primarily via the OTAs or their initiatives like Booking.basic. This is a huge problem in Europe and APAC, not so much in the U.S. See this article by HotelBeds, trying to present itself as anti-rate leaker, while a lot of hotels accuse this wholesaler to be one of the rate leakage offenders. What's your take?
The problem of “rate leakage” is not new. I remember working for a global brand in the early 2000s in APAC, and we were very active in trying to control onward distribution which went against contracts. With technology and integration, the issue has become more widespread and obviously critical for hotels to control. Hoteliers need to take a firm stance against wholesalers (and OTAs) who act on the fringes (or beyond) their distribution agreements. Rate parity reporting tools are now widely available and can help identify reservation sources. Offenders (and their sources) must be cut off from a hotel's distribution strategy. Ultimately, a rogue wholesaler without any hotel rooms to distribute is not going to survive very long. The power is in the hands of the hotels.