What Is Rate Parity? Hotel Parity Clauses Explained

A guest finds a room on the hotel’s website for 119 euros and on a booking platform for 125 euros. For a long time, that was exactly what was not allowed. Today it is. This entry explains what rate parity means and why it has kept courts and the EU busy.

What rate parity means

Rate parity means the same price for the same room on the same terms across all distribution channels: on the hotel’s own website, on booking platforms and over the phone. Some hotels keep their rates the same voluntarily because it keeps things simple. It becomes a problem when a platform requires parity by contract.

Wide and narrow parity clauses

Booking platforms secured parity through parity clauses, also known as best-price clauses. The wide clause prohibited hotels from offering rooms more cheaply anywhere else, including on other platforms. The narrow clause only covered the hotel’s own channels: the room could not be cheaper on the hotel’s website than on the platform, but it could be on other platforms.¹

What the courts decided

In Germany, the Federal Cartel Office prohibited Booking.com’s narrow parity clauses. In 2021, the Federal Court of Justice confirmed that they infringed competition law: they removed hotels’ incentive to pass on commission savings to guests through lower prices on their own websites. Booking.com had used the clauses until February 2016.²

In 2024, in a case referred from the Netherlands, the Court of Justice of the EU ruled that wide and narrow parity clauses cannot in principle be classified as ancillary restraints. It has not been established that they are objectively necessary for the platform. The national court decides the specific case.¹

What applies today

The European Commission has designated Booking.com as a gatekeeper under the Digital Markets Act. Since 14 November 2024, the platform has had to allow hotels and other providers to offer better prices and conditions on other online channels and on their own websites than on Booking.com. Measures that restrict this freedom are prohibited.³

So hotels may be cheaper on their own website than on Booking.com. Whether and by how much that is worthwhile is a commercial question each property has to answer for itself. The Digital Markets Act only applies to platforms designated as gatekeepers, so hotels should check their contracts with other platforms for parity clauses of their own. This entry is not legal advice.

What hoteliers should look for

More in the magazine

Why the EU is investigating Booking.com over fake listings and phishing, and what verified hotel stars can achieve, is explained by Markus Luthe in our article "Verified hotel stars move into focus as the EU investigates Booking.com". Why bookings through the hotel’s own website matter for margins is shown in the glossary entry on direct booking, and how booking platforms work in the entry on the OTA.