An Endless Fight for a Guest, Getting Bloodier..

29 Feb An Endless Fight for a Guest, Getting Bloodier..

1st Marriott
First Marriott hotel in Arlington, Virginia – 1957

Digital presence of any business is indispensable today not only to succeed, but for survival. When it comes to hospitality business, most of the independent hotel owners are traditionally behind in getting equip with the pace of technology growth.

That is the weak point that created a business success for OTAs or Online Travel Agencies such as Expedia, Booking.com and so on. Though OTAs were originally created for selling excessive inventories for low selling seasons, OTAs such as Expedia and Priceline (especially Booking.com) have grown so high with staggering brand recognition without a tougher competitor that hotels can’t do business without them, despite ever declining hotels’ direct bookings that saves them OTA commission of 15% to 35% on each booking.

OTAs, Indispensable:

While OTAs are known for last minute filling for any size of hotels, for small hotels and independent brands without much of technological sophistication and not on a global scale, OTAs’ services add great value in taking their businesses to extended reach with currency conversions, multi language support, multi device supported websites with user friendly high quality content and more importantly giving hotels the billboard effect by listing the hotels free of charge with their own huge marketing budget. For bigger hotels and chains, OTAs help them diversify their customer base by delivering new customers, and last minute fillings. While, for any hotels there is also possibility that a guest initially earned through OTAs to make many more subsequent future bookings directly with the hotel.

With gigantic marketing budgets OTAs are working with, Booking.com (as single OTA though they are part of Priceline), Expedia, Priceline, Kayak being in top ten travel advertisers in Google AdWords for consecutive years, for any hotel or chain, the billboard effect hotels get is a great plus when a potential booker uses OTAs for comparison shopping and then ends up booking on hotels’ own websites, of course after a Google search on hotel’s website 🙂

top tem travel advertisers

OTAs have and Hotels don’t?

On the traveller’s’ side, a better user experience with OTAs’ user friendly responsive website with wealth of information benefitting the travel plan, along with valuable quality content, clear images, customer reviews, maps of the hotels, personalized offerings, traveller intention studied web responding, deliver information in local languages and currencies, flight and car rental info, weather related info, easier and quicker booking steps, details of incentives offered, website security, local restaurants info, attractions, local events, more importantly to create a member login for the travellers so that personal info and preferences can be saved for making future booking process easier, a better comparison shopping experience and more (that I might have missed out – sorry) is what a OTA’s offer in comparison with a hotel’s website today.

As a traveller looking to book a room online, this is what helps me a lot (with a better rate options of course) while I care very less about 15% – 35% of commission that hotel gives to OTAs or what happens behind the scenes, unless I am brand conscious and loyal to a brand sort of a traveller.

Time to Level up?

All that good things said, the overall balance between OTA bookings and Direct bookings has not been fair, and this is due to combined force of sky-hi marketing budge and technical superiority of these leading OTAs.

According to SpyFu.com statics:

Marriott becoming the largest hotel chain with acquisition of Starwood spends estimated $229.3K in Google’s paid advertisements program, Google AdWords monthly.

Spyfu Marriott

On the other hand, Booking.com spends estimated 988.5K in Google’s paid advertisement program, Google AdWords that monthly.

spyfu booking.com

468636 keywords; probably including bidding for hotel brand names such as in this open letter to Booking.com from a hotel http://www.so-geht-hotel-heute.com/2015/02/brand-hijacking-booking-com/. However, Booking.com justifies this by saying that as per partner contract, they are marketing all their property partners with no extra cost to them.

Below steps could better describe scenario 1:

1.You Pay Commission to OTA
2.OTA uses fraction of your commission to advertise your hotel (for example in Google)
3.Customer searching your particular hotel finds you with OTA rates
4.OTA books the reservation, takes the commission
5.Sends you the customer

Below steps could better describe scenario 2 and this is advantageous to the hotel:

1.You Pay Commission to OTA
2.OTA uses fraction of your commission to advertise your hotel (for example in Google)
3.Customer searching any hotel in your city
4.OTA books the reservation, takes the commission
5.Sends you the customer

This is very clear how OTAs dominate the market while hotels are reluctant to challenge this monopoly of giant OTAs with their huge marketing budget with technical supremacy. However for hotels, this is not the end of the route to balance their direct bookings against OTAs.

Help is available to hotels; Google Hotel Ads and TripAdvisor’s Instant Booking.
While there is a possibility as Google entering into travel booking market and making continuous improvements to hotel search across globe to help travellers find quality information such as hotel maps, better rates, hotel images, descriptions and online reviews with its Google Hotel Ads program, might weaken the OTA’s distribution power and break the monopoly.

Is Google or TripAdvisor replacing OTAs?

Kind of YES/NO! Google simplified hotel search experience by phasing out its Hotel Finder metasearch that travellers can now search for hotels in familiar general Google search or Google Maps. Even though Google itself is another middle-man in the booking process, considering its search volume of 40,000 queries per second can definitely change the game and create a level playing field with its positive sides of hotels to display their own rates through direct feedings, ability to increase the hotel website’s visibility in the search results as well as in the Hotel Information Card while initiating the booking process and finally analytics on entire journey of the traveller that allows a hotel to gain insights.

You can get more info on Google Hotel Ads here including Google approved third party integration partners whose services you can hire to implement and manage Ads campaigns.

Google Hotel Ads works on CPC (Cost per Click) bidding model with varying bidding options that helps hotels in better targeting markets, conversion optimization and competitive marketing strategies based on relatively complex bid management with so called Base Bids of 1: percentage of room rate or 2: fixed CPC per night. Once these Base Bids are setup, hotels can then further increase or decrease Base Bids value for number of other factors such as Device Type traveller using to click, Traveller Country, Length of Stay, Google site used such as Google Search or Maps, Day of Check in, and Advance Bookings to further target, optimize and be competitive with the results according to seasons and situations.

For more detail, check these Google’s video tutorials, including Google Hotel Ads Center where hotels can manage their own bidding and see campaign performance reports.

It is highly important that hotels focus on having a clever bid management strategy to achieve higher ranking as lowest rate with highest bid gets the better ranking within the same rate bucket like in most of the metasearch engines. In our upcoming posts, we will get into more details of Google Hotel Ads bidding.

I also would want to mention that Google is also having a commission based program, ‘Book On Google’ and it uses Hotel Ads Commission Program. Rather than CPC, it is a commission based without visibility to the hotel’s website as the traveller completes the booking within Google interface, and then Google hands over the traveller to hotel for any pre-stay and post-stays relationship management, including sending the guest’s confirmation. Currently this feature is available only in the US.

TripAdvisor’s Instant Booking:

Unlike Google’s Hotels Ads, TripAdvisor’s ranking system highly depends on automated and then manual content verified customer reviews. Currently the service is available in 11 countries, US, UK, Australia, Canada, Ireland, Malaysia, New Zealand, Philippines, Singapore, India, and South Africa. Even though there is no possibility to route the potential traveller to hotel’s website as the entire booking process is completed within TripAdvisor website, the hotels own the customer relationship right from sending the confirmation letter till the end. That means they share with hotels the customer information unlike OTAs. And their commission model of payment after the actual guests’ stay is attractive too. Check here for more information

Conclusion:

Even though Google or TripAdvisor does not still bring in as many guests as OTAs do, it is undoubtedly imminent that they will get there in no time. It is also potential threat for hoteliers themselves as they entering into booking business while they both claim their services to be ‘direct’ friendly with giving hotels better opportunity to directly deal with customers, it is hotels’ responsibility how best they can leverage these opportunities to positive side of them, given the fact that giant OTAs with gigantic marketing budget powered by technical supremacy who are notorious for onerous contracts have a tougher fighters now, especially to break up the duopoly of Expedia and Priceline.

By Alan Miles for www.operapmsexperts.com

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