What is the Grey Market in hospitality?
In hospitality, the Grey Market refers to the sale of hotel rooms through unauthorised channels or at prices that do not comply with the hotel’s agreed terms. These channels often acquire inventory indirectly, for example, by purchasing from wholesalers who then resell outside the original agreement.
📌 Why is the Grey Market important?
- It can disrupt pricing strategy and rate parity.
- Makes it harder to control distribution and apply revenue management policies.
- Can harm the hotel’s image if rates appear on websites misaligned with the brand.
🏨 Practical example of the Grey Market
A hotel sells rooms to a wholesaler for packaged holidays at a fixed price. That wholesaler, instead of following the agreement, resells the rooms to online travel agencies offering them at prices lower than the hotel’s official website, breaking the pricing strategy and causing confusion for the guest.
🔍 Grey Market clarification
- Not to be confused with the Black Market, which involves illegal activities; the grey market operates in a “legal” space but outside desired control.
- Also different from direct sales or official multichannel distribution; here the issue is the lack of authorisation or non-compliance with terms.
💡 The Grey Market is like when your rate takes a weird detour and pops up somewhere it shouldn’t… and for less money.
