Online travel agencies sometimes have an aggressive pricing policy for hotels
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May 2025 – A new report reveals that online travel agencies (OTAs) are increasingly undercutting hotel prices—especially when hotels set rates above the market average. The findings, from 123Compare.me’s World Parity Monitor (WPM), highlight a growing trend of aggressive pricing strategies, with smaller OTAs leading the charge.
Key Findings: OTAs Undercut Hotels in 75% of Cases
- 75% of hotels in the study were undercut by at least one OTA.
- Smaller OTAs were the most aggressive, particularly when hotel prices exceeded the market average.
- Expedia broke its moderation trend, surpassing a 20% “loose rate” (instances where OTAs undercut direct hotel prices).
- Independent hotels suffered most, with a 41.8% loose rate when pricing 40% above market average.
Why Are OTAs Getting More Aggressive?
The report suggests that OTAs, especially smaller players, are using dynamic pricing algorithms to exploit hotels that price above the norm. Jordi Serra, CEO of 123Compare.me, warns:
“If you’re even slightly above average, OTAs will react aggressively. Independent hotels must carefully monitor market trends—or risk losing direct bookings.”
Hotel Pricing Trends: Direct Bookings Face Pressure
- Direct hotel prices rose 6.3% (Jan-Apr 2025 vs. 2024), continuing an upward trend.
- Lower-priced hotels maintained competitiveness, but mid-range and luxury properties saw more OTA undercutting.
- Seasonal spikes (e.g., Easter) pushed direct prices higher, triggering OTA price wars.
Who Wins—And Who Loses?
✔ Consumers benefit from cheaper rates via OTAs.
✔ Small OTAs gain market share by slashing prices.
❌ Hotels lose control over pricing parity.
❌ Independent hotels suffer most, as they lack the bargaining power of chains.
What Should Hotels Do?
- Monitor Competitor Pricing – Avoid setting rates too far above market averages.
- Boost Direct Booking Incentives – Offer perks (free upgrades, late check-out) to reduce OTA reliance.
- Leverage Loyalty Programs – Encourage repeat guests to book directly.
The Bigger Picture: A Battle for Booking Dominance
With OTAs tightening their grip, hotels must adapt—or risk losing revenue to third-party platforms. As Serra puts it:
“The data shows a clear pattern: OTAs pounce when hotels overprice. Smart pricing is no longer optional—it’s survival.”
Final Thought:
The OTA-hotel price war is heating up. While travelers enjoy short-term discounts, the long-term question remains: Can hotels reclaim pricing power—or will OTAs dominate forever?
— Report by 123Compare.me | May 2025
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