1.6 Rate Parity (5%) – For 19 hotels* without STR reports only 1. Our Business (40%)
Rationale
A key strategic pillar to achieving our book direct strategy is achieving pricing parity on all our channels. Our guests are unlikely to book on our own channels which are the most profitable to us such as the Shangri-La App, Shangri-la.com, hoteljen.com if they can find cheaper rates through third parties such as C-trip or Booking.com to whom we pay a large commission for every transaction. Therefore, we must achieve rate parity which is the key enabler of successfully executing our Book Direct strategy.
Guiding principles
Definitions
In the hotels’ attempt to drive rate parity, to minimize risk and undesired fluctuations, we are setting these ground rules to prevent drastic changes in rates: • The tool will take into account a 2% buffer to account for any possible discrepancies caused by rounding, exchange rate, etc. • Only if the variance between the rate on brand.com and a third party is higher than 2%, will this be marked as "lose" (out of parity). For a hotel to score points in this metric: • Must attain a minimum performance of 80% of Rate Parity goal (the target) • 80% of the target or above will incrementally receive additional score • Maximum score will be awarded for 110% and above of the target • Dec YTD score will be adopted as the 2019 BSC final result Scoring Mechanism
1. ForNova A tool, we have subscribed to, which provides us with a system that tracks the rates of our hotels on: • Brand.com; • 3 contracted OTA’s (Booking.com, Expedia, and Ctrip); and • 3 meta's (Tripadvisor, Trivago and Qunar). Up to 3 points of sale (e.g. expedia.com.au, .uk or .jp) have been selected for each OTA / meta based on the main geographic feeder markets of each hotel individually Please refer to this link for the list of points of sale which have been validated by the regional revenue team and also the “2019 YoY Growth Target”
2. Brand.com This includes: • Shangri-La.com • Hoteljen.com
3. Rate shopped Lowest price point available for public sale, this can be flexible or with restrictions (such as Advance Purchase) Rate integrity is established when the price point on brand.com is equal (or lower) than on the OTA/meta (no matter what rate product) Items such as currency, taxes, service charge, etc are taken into account for rate integrity comparison
Rate Parity
Score
≥ 110% 6.0^ 100% - 109% 5.0 – 5.9 90% - 99% 4.0 – 4.9 80% - 89% 3.0 < 80% 0
Measurement
Rate integrity score = percentage of times a rate found on brand.com was equal or lower than on the OTA/meta (measured from 1 January – 31 December 2019) The measurement can be found on the dashboard when entering the ForNova online tool and change time view to "Month". Rate integrity performance = actual rate integrity score ÷ rate integrity score target
^ For hotels with goal > 90%, 6.0 will be awarded if hotel achieves rate parity score of ≥ 95%
*HJM, MAC, SLBO, SLTN, SLWZ,SLBT, SLCC, SLHH, SLMZ, SLQF, SLQH, SLUB, SBHI, SLDQ, SLGL, SLLS, HJMD, HJP, RSR
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