Rate Leakage
Rate leakage is the loss of revenue or pricing control that occurs when a hotel's room rates appear lower, or on terms more favourable to the guest, on third-party channels than the hotel intended. It typically happens when a rate is exposed outside the channels and conditions it was meant for: through wholesale contracts resold by unauthorised sites, opaque or package rates that are "unbundled", mobile or member discounts that leak into metasearch, or stale rates left open after a price change.
Why it happens
- Net rates sold to bed banks or wholesalers are resold publicly at below-BAR prices.
- Closed user group (CUG) or package rates are surfaced on open channels.
- Inconsistent updates across the channel manager, so some channels keep an old, lower price.
- Promotions or OTA-funded discounts stack on top of an already discounted rate.
Example
A hotel sells BAR at €200 on its website. A wholesale partner holds a net rate of €150 and a reseller displays it publicly at €175. Guests searching on metasearch see €175 and book there instead of direct. If 40 room nights a month shift this way, the hotel loses €25 per night in rate and pays distribution costs it would have avoided, around €1,000 in rate dilution plus the cost of the lost direct bookings.
Why it matters
Rate leakage erodes ADR, undermines direct booking incentives, and can breach parity commitments with OTAs, which may then penalise the property in visibility. It also damages guest trust when the same room is seen at different prices. Hotels detect it with rate shopper tools and parity monitoring, and fix it by tightening wholesale contracts, using rate fences, and controlling inventory distribution.
Related
See Rate Parity, Rate Shopper, Rate Fence, Wholesale / Net Rate and BRG (Best Rate Guarantee).