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Why is my undercut rate different in the new version of the Parity Product?
Why is my undercut rate different in the new version of the Parity Product?
Andrew Williamson avatar
Written by Andrew Williamson
Updated over a week ago

If you've been using the Parity Monitoring product for some time, you probably have a good grasp on what your undercut rate tends to look like and how its improved over time. When logging into the new product, you might be a little surprised to see that the undercut rate has changed (as well as their in parity and cheaper direct rates.)

See the screenshot for a side by side comparison of the undercut rate displayed in both versions of the product (this is data for the same hotel)

There are a few contributing factors for why the numbers have changed, but the fundamental reason is that we have taken the decision to change the way we calculate undercut rate.

How has the way we calculate undercut rate changed?

In the old version of the product, we would make price comparisons with OTAs independently of each other. So when a user made a search on the booking engine triggering some live price comparisons, the result of these comparisons were counted individually.

If 1 OTA is undercutting direct, and 3 OTAs are more expensive, this would count as 1x 'undercut' and 3x 'cheaper direct',

Now when a user makes a search on the booking engine triggering some price comparisons, we consider the results of each comparison together. So now if 1 OTA is undercutting direct, and 3 OTAs are more expensive, this would count simply as 1x 'undercut'.

The overall effect of this is that everyone's undercut rate may be slightly higher than before. This is because we are now saying that any undercut counts as a loss

Why have we changed the way we calculate undercut rate?

The new calculation is slightly harsher and will lead to higher undercut rates overall, however this way of thinking about parity more closely resembles the 'winner-takes-all' ethos of metasearch.

On meta, where all OTA prices are listed next to direct for easy comparison, it's very easy for guests to identify who has the best price. Any OTA undercut will therefore influence guests' booking behavior.

On meta, having a better price than 9/10 OTAs is no longer good enough, as that 1 OTA that is undercutting direct will draw guests' attention and will siphon away bookings from the direct channel. Our new method for calculating the undercut rate better reflects the harsh reality of parity, not just on meta, but across the whole internet as guests become savvier and more able to find the cheapest possible rate for your hotel.

How to make sense of your new undercut score

Of course there's still room to break down your score and analyse further. Because we're now counting any undercut as a loss, you might find that your undercut rate is much more heavily influenced by a single OTA. Using the OTA parity breakdown, you can easily identify which OTAs are causing your score to increase, which you can use to focus your efforts when it comes to improving your parity.

Other factors that could cause discrepancies between your old undercut rate and new undercut rate

The main reason your score might look different now is explained above, but there are some other more subtle factors that can also influence it:

  • time period - we've changed the default from 'last 30 days' to 'last 28 days'.

  • occupancy - currently we're filtering your data just to 2 guests (we'll include more data in the future).

  • in parity threshold - you can now set a custom threshold within which small price discrepancies are considered as 'in parity' rather than 'undercut'. This works in a similar way to the old 'minor disparities' feature, but now you can define what counts as a minor undercut yourself.

  • OTA selection - as you can now choose which OTAs you want to consider in your parity analytics, adding or removing OTAs from this will change the undercut rate.

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