Hotel Online  Special Report

 Offering Price Guarantees on Your Website – the New Paradigm
September 2005 - Today’s online consumer is price sensitive and does not hesitate to browse through several websites for comparing rates before taking a purchase decisions. This has become even more pronounced for the online buyer of travel inventory as there is a plethora of websites offering the same inventory. The large online distributors now need to maintain their prices lower than their competitors’ on an ongoing basis; and also convince the online buyer that the prices at their website for the particular travel inventory item are the lowest amongst all the competitors. A very efficient way of winning that consumer confidence about pricing is to offer the lowest-price guarantee with a penal clause. The price-guarantee acts as a powerful sales tool for convincing the consumer to make an immediate purchase decision and prevents him from browsing through other websites to compare rates.

The ability to have the lowest price offered on their websites, at all times, has become even more important for hotel chains that are selling their room nights through diverse online channels including their own brand website. These different online channels tend to compete with each other for the same rooms and make frequent changes to the displayed rates in order to maintain competitiveness. That makes it important to not only provide a low-price guarantee but also to actually conform to it to avoid paying penalties. 

Thus any travel distributor, may it be the brand website or a merchant one, that offers lowest price guarantee on its website must use a rate monitoring mechanism for tracking the rate-changes on competing websites. This would either involve manually checking the competitor websites or availing the services of a technology partner who would use sophisticated technologies to pull rates from competing websites and compile comparative reports. The technology is called Rate Shopping and has the potential to provide alerts whenever the competitors’ prices fall lower than the reference website assigned. The availability of this decision support information enables the user website to accurately track competitor price-movements and make necessary amends to their own prices in line with the price guarantee. 

LOWCOSTBEDS is such a website that offers price guarantee on its holiday packages. This is what Paul Evans, the founder of LOWCOSTBEDS had to say about rate Shopping technology, “Pricing intelligence solution helps us assess and adjust our hotel pricing in a highly competitive marketplace to enable us to place a price guarantee on our inventory”. 

Conversely, deployment of Rate Shopping techniques can enable a website to offer a lowest price guarantee with confidence, knowing that the technology will be able to support it by providing timely alerts on competing websites. Several popular hotel brands are known to have built their price-guarantee models on active use of pricing intelligence, thus adding to the increased usage of this technology for monitoring prices on competing websites.

About the author:
Aqeel Ahmed is the COO at RateGain and can be reached at  RateGain provides Internet-based competitive pricing intelligence to the travel industry. Their clients include merchant travel portals, airlines, hotel chains, travel inventory consolidators and market research firms.


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Also See: Online Travel Agents vs Travel Search – The Debate / Bhanu Chopra / May 2005
Internet Based Rates Monitoring Services from eMark Services Relaunched as RateGain / April 2004

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