Johannesburg, South Africa – A recent ruling by South Africa’s Competition Commission has sent shockwaves through the global hospitality industry. By challenging the long-standing practice of rate parity between hotels and Online Travel Agents (OTAs), this decision marks a potential turning point in how hotels price and distribute their rooms online.

“This ruling is about giving control back to the hotels and allowing them to be very strategic about how they distribute themselves online,” says Shane van Moerkerken, Business Development Manager for Profitroom, a leading provider of hotel booking technology.

For years, OTAs like Booking.com and Expedia have dominated hotel distribution, often dictating pricing strategies through rate parity agreements. However, this recent ruling in South Africa, echoing a similar decision in the EU, has shaken up this landscape, potentially redefining the relationship between hotels and OTAs.

By challenging rate parity clauses, the ruling gives hotels greater control over their pricing and empowers them to attract more direct bookings. This could lead to significant benefits for hotels eager to reduce hefty OTA commissions and create a more dynamic environment for travellers seeking the best deals.

With rate parity off the table, hotels now have unprecedented opportunities to shape their pricing and distribution strategies. While offering competitive rates is important, hotels can now focus on creating value beyond just price. This could involve developing exclusive packages for direct bookers, implementing tiered loyalty programmes that reward repeat guests, or curating unique local experiences that OTAs simply can’t match. By leveraging their intimate knowledge of their property and destination, hotels can craft personalised offerings that resonate with their target audience and drive direct bookings.

To truly capitalise on this new era, hotels must be proactive in their approach. “Investing in the right technology is crucial,” van Moerkerken emphasises. “A user-friendly website with a seamless booking engine is no longer optional – it’s essential for competing in the direct booking landscape.”

Beyond the booking engine, hotels should consider implementing sophisticated revenue management systems that allow for dynamic pricing based on real-time demand. This technology enables hotels to maximise revenue by adjusting rates quickly in response to market conditions. Equally important is a robust digital marketing strategy.

“Hotels need to think like e-commerce businesses,” van Moerkerken advises. “This means investing in content marketing, social media campaigns, email campaigns, marketing automation, and search engine optimisation to drive traffic directly to their websites.” By building a strong online presence, hotels can reduce their reliance on OTAs for visibility and customer acquisition.

Creating unique selling propositions is another key strategy. This could involve highlighting eco-friendly practices, showcasing local partnerships, or offering exclusive amenities to direct bookers. The goal is to differentiate the hotel from competitors and provide value that goes beyond just the room rate.

The elimination of rate parity is just the beginning of a larger industry transformation. Emerging technologies such as artificial intelligence and machine learning are set to impact hotel operations. These tools can enable more accurate demand forecasting, personalised guest communications, and streamlined check-in processes.

Cloud-based property management systems are also gaining traction, allowing hotels to manage their operations more efficiently and integrate with various distribution channels. This technology can help hotels maintain consistent pricing and availability across all platforms while maximising direct bookings.

We may also see the rise of alternative booking platforms that prioritise direct relationships between hotels and travellers. These could challenge the traditional OTA model by offering lower commissions or more flexible terms for hotels.

The demise of rate parity marks a turning point for the hotel industry. It is the beginning of an era of increased competition and innovation, but also presents exciting opportunities for hotels to take control of their distribution strategy. Those who embrace this change, invest in the right technology, and focus on building direct relationships with guests are poised for success in this new landscape.

About Profitroom

Profitroom is the supreme direct booking engine for hotels, lodges, and resorts, offering a comprehensive solution that seamlessly integrates direct bookings on hospitality websites with other distribution channels, automated marketing, SEO and SEM campaigns, cross- and up-selling opportunities, and much more.

Founded in 2008 by Marcin Dragan, Profitroom was created to address the challenges faced by hoteliers in maximising direct bookings and enhancing their online presence. Today, it empowers over 3,500 properties to significantly increase their direct bookings, with some experiencing up to 96% growth. Our intuitive, all-in-one platform is designed for ease of use across multiple properties, backed by a team of over 300 experts providing support in 7 languages. Profitroom’s mission is to become the #1 Booking Technology Partner for Outstanding Hotels Worldwide.

Shane van Moerkerken is the Business Development Manager for Profitroom, a leading provider of hotel booking technology. With over a decade of experience in the travel tech and hospitality industry, Shane brings a wealth of knowledge to his role.

Prior to joining Profitroom, Shane spent eight years with Expedia Group, where he most recently served as an Associate Market Manager. In this role, he managed relationships with high-performing hotel partners across South Africa, Tanzania, and Zanzibar, driving significant revenue growth and market expansion.

Shane’s background also includes experience in digital marketing and online sales strategies for hotel groups. He holds a bachelor’s degree in Brand Building and Management from Vega School, giving him a unique perspective on the intersection of hospitality, technology, and marketing.

With his extensive industry experience and deep understanding of hotel distribution strategies, Shane is well-positioned to offer insights on the changing landscape of online hotel bookings and the impact of recent regulatory changes on the industry.