Beyond Price: How Platform Power Shapes Demand Allocation in Online Hotel Channels

Rate disparity remains a widely used but poorly understood pricing strategy in the hotel industry. While previous research generally assumes that lower prices shift demand toward less expensive channels, this study investigates whether such effects occur in practice. Using high-frequency booking and pricing data from five full-service hotels across multiple online travel agencies (OTAs), we analyze how rate disparity relates to the distribution of demand across channels. The findings show that the impact of price differences is limited, highly non-linear, and strongly dependent on contextual factors. Channel market power and hotel-specific characteristics seem to play a more significant role than price advantages under the observed conditions. Rate disparity reallocates demand across channels rather than increasing total demand within the sample studied, and its effectiveness varies across demand seasons and competitive environments. These results challenge the prevailing focus on price-based competition and suggest that platform dynamics and hotel attributes may play a more central role in distribution outcomes.