The latest World Parity Monitor reveals rising risks for independent hotels as non-major OTAs aggressively undercut inflated direct prices
May 20, 2025
As hotels sharpen their revenue strategies in an increasingly competitive landscape, the latest World Parity Monitor (WPM) from 123Compare.me reveals how a hotel’s price positioning relative to its market average influences OTA behavior – especially in terms of rate undercutting. The April 2025 report warns that pricing above the market average significantly increases the likelihood of OTAs, particularly non-major ones, undercutting direct rates. Independent hotels are especially exposed to this risk, emphasizing the need for vigilant pricing strategies.
Key takeaways
- High prices trigger undercuts: Hotels priced above the local market average face higher “Lose rates” – the rate at which OTAs undercut the hotel’s direct price. This effect is most pronounced for independent hotels.
- Non-major OTAs are more aggressive: While major OTAs like Booking and Expedia maintain stable undercutting behavior, non-major OTAs increase undercutting as hotel prices rise, posing a greater risk to price parity.
- Independent hotels at risk: At more than 40% above market average, independent hotels saw Lose rates jump to 41.8% with non-major OTAs – much higher than the 34.0% observed with major OTAs.
- Overall undercutting still common: 75% of hotels in the sample were undercut by at least one OTA. Expedia’s Lose rate exceeded 20%, reversing a recent trend of moderation.
- Seasonal pricing trend: Direct rates increased 6.3% from January to April 2025 vs. the same period in 2024, reflecting a typical seasonal upswing influenced by events like Easter.
- Competitive advantage in lower segments: The direct booking channel performs best in lower and mid-price segments, showing stronger rate parity and higher Meet rates at those levels.
Get the full story at World Parity Research Group
