How metasearch could revolutionize Best Rate Guarantee programs in hotels

February 17, 2015

In the hotel industry, Best Rate Guarantees have mostly become a way for travel hackers to get cheap and free hotel stays. Here’s how hotels can evolve BRG programs to do what they were originally intended to do: encourage more direct bookings.

In the early days of hospitality e-commerce, when the popularity of online travel agencies took off and consumers realized that they could easily comparison shop between hotel websites and OTA websites, the big brand names took swift action to reassure customers that their own site’s prices were indeed the lowest. Thus was born the “Best Rate Guarantee,” or BRG.

The premise was simple: if a guest found a lower rate on an OTA site, the hotel would not only match that rate, but would also provide an additional discount or incentive such as a free night. Because the cost of the discount or comped night was far less than the commission paid to an OTA, the hotels considered this a worthwhile expense. Best Rate Guarantees soon became standard across the entire hotel industry.

At first, the BRG process was relatively straightforward. If you have booked a room with a hotel and have found a lower rate elsewhere, submit an online claim within 24 hours. An agent will verify the claim and get back to you with the matched rate and additional discount.

It wasn’t long before the bargain hunters began to swoop in.  Bolstered by the rise of travel metasearch sites, these frugal travelers found that BRGs were a great way to game the system. With just one simple search on Kayak.com, a mere $1 difference in nightly rates between an OTA and hotel site could translate into a free night for one of these intrepid guests. And these self-proclaimed “guarantee junkies” do this for each night of their trip, admittedly hopping from hotel to hotel without paying a single cent. In fact, taking advantage of Best Rate Guarantees has become an open secret in the travel hacking community. Consider the step-by-step instructions here, the BRG benefits table here, or the “Basics” guide to BRGs here.

Hotels of course have wised up to the game. But instead of doing away with Best Rate Guarantees, they have simply implemented rules. LOTS of rules. Rules so complex that they are written in 8pt font in the style of a legal contract. The only ones who seem to care are the travel hackers, who now lament the “tragic state of Best Rate Guarantees.”

How did BRGs devolve so far away from their original goal of encouraging direct bookings? The truth is, in spite of the examples above, the majority of consumers simply don’t care about using Best Rate Guarantees. It’s too much work to submit a claim, especially when all they care about is getting the best price possible at the time they book.

In a research paper on low price guarantees, Cornell University had warned hotels that BRGs “in their present form have little value to the consumer.” The paper goes on to argue that a new pricing model is needed so that “price-sensitive customers will find it in their best interest to make a reservation and look no further.”

This paper was written in 2005.

All these years, hotels have been using the same antiquated Best Rate Guarantee programs. And the original reason that they were implemented — to keep direct bookers from defecting to OTA sites — has not worked. OTAs continue to take larger pieces of the pie, and hotels are left wondering why.

Truthfully, it’s not the concept of Best Rate Guarantee that is the problem, but rather the implementation. Hotels have been using the same technology to run their BRG programs since the early 2000s: the online email form. We can now use smart watches to unlock hotel rooms, but we’re still using email forms to ensure best available rates to guests?

The technology must evolve so that Best Rate Guarantee programs can evolve. As most customers can’t be bothered with submitting online BRG claims, the only way a BRG program is effective is if it’s integrated directly into the hotel booking engine. As the customer is searching for dates, the automated Best Rate Guarantee program would instantly pull current prices from the major OTAs and display them alongside the hotel’s best rate. If prices are out of parity, the hotel CRS could instantly match the rate and offer an additional discount.

The benefits are two-fold. First, the customer is highly incentivized to book directly with confidence. Second, the hotel automates the fulfillment of BRG claims, making it an instant online process instead of a cumbersome offline process that usually takes hours, even days, of turnaround time.

We’ve said before that it’s up to hotel technology companies to step up to the plate and give the hotels what they need. No more excuses, no more outdated email forms. The Best Rate Guarantee needs to empower hotels, not be fodder for travel hackers to get free stays.