Title of Paper

Hands off my rates! The economic consequences of the rate parity legislative actions in Europe and the US

Author Bios (50 Words)

Abhinav Sharma is a PhD student in the Howard Feiertag Department of Hospitality and Tourism Management in the Virginia Tech Pamplin College of Business.

Juan L. Nicolau is the J. Williard and Alice S. Marriott Professor of Revenue Management in the Howard Feiertag Department of Hospitality and Tourism Management in the Virginia Tech Pamplin College of Business.

Abstract (150 Words)

The objective of this research is to analyze the impact that the legislative actions regarding rate parity agreements have on the market value of hotels and online travel agents in Europe and the USA. Pricing agreements between hotels and OTAs have received particular attention, especially the rate parity clauses, which entail uniform hotel room pricing across all distribution channels. Interestingly, this issue has been solved differently depending on the countries: while several European countries have outlawed rate parity clauses, the legal status of rate parity has been reaffirmed by courts in the United States. The contrasting legislative outcomes in Europe and the United States allows us to explore, in a more rigorous 2x2 framework, changes in market value market of OTAs and hotels resulting from two divergent categories of events. The results show coherent outcomes in both continents: rate parity is beneficial to OTAs but not to hotels.

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Hands off my rates! The economic consequences of the rate parity legislative actions in Europe and the US

The objective of this research is to analyze the impact that the legislative actions regarding rate parity agreements have on the market value of hotels and online travel agents in Europe and the USA. Pricing agreements between hotels and OTAs have received particular attention, especially the rate parity clauses, which entail uniform hotel room pricing across all distribution channels. Interestingly, this issue has been solved differently depending on the countries: while several European countries have outlawed rate parity clauses, the legal status of rate parity has been reaffirmed by courts in the United States. The contrasting legislative outcomes in Europe and the United States allows us to explore, in a more rigorous 2x2 framework, changes in market value market of OTAs and hotels resulting from two divergent categories of events. The results show coherent outcomes in both continents: rate parity is beneficial to OTAs but not to hotels.