Is hotel metasearch a distribution or advertising channel?
— 9 experts shared their view
Hotel metasearch has existed for over 20 years now (SideStep, acquired by Kayak), but has been elevated in importance ever since Google launched its Google Hotel Finder product back in 2010, which later became Google Hotel Ads (GHA).
For many years metasearch players used predominantly the CPC (Cost-per-Click) model (Trivago, TripAdvisor, GHA, etc.). Nowadays, most metasearch players use the CPA (Cost-per-Acquisition) model i.e. charge a fee in the form of a commission when a booking is done.
Last year, responding to the travel slump due to the pandemic, Google introduced its Pay-per-stay (PPS) model i.e. Google charges a fee in the form of a commission only if the booker actually stays at the property. Earlier this year Google even resorted to its masterful freemium model and offered hotels free booking link listings in GHA to lure more hotels into its metasearch program. By flooding each destination with booking options, Google is forcing hotels, OTAs and other booking sites to compete for visibility I.e. opt for the PPS premium listings.
The question is: Has hotel metasearch become a distribution channel that needs to be managed by the revenue management team like all commission-based channels like OTA, GDS, etc. or should remain as part of the marketing team's toolset?
Adjunct Professor NYU Tisch Center for Hospitality and Hospitality & Online Travel Tech Consultant
Hotel metasearch has become a distribution channel and is no longer an advertising channel ever since Google introduced its Pay-per-stay (PPS) fee model. Other metasearch players like Trivago and Kayak all offer CPA (Cost per acquisition) model, which is not in tune with the current era of high cancellation rates due to Covid uncertainties and ever-changing travel restrictions.
Since Google's share of metasearch clicks, leads and bookings is larger than all other metasearch players combined, it simply doesn't make sense to spend your property's precious marketing dollars on CPC (Cost per Click) metasearch advertising. Google's PPS is the way to go and it makes sense Google Hotel Ads to be treated as just another distribution channel since this channel is commission-based like the OTAs, GDS, etc.
There is another wrinkle to the story: earlier this year Google introduced free hotel booking links in its Google Hotel Ads (GHA) program. Google has been trying quite unsuccessfully for over 12 years now to lure more independent hotels join the GHA program. Now Google has resorted to its masterful freemium model: give every hotel a free booking link listing, flooding each destination with booking options thus forcing hotels, OTAs and other booking sites to compete for visibility.
Example, if Google lists for free all 700 hotels in New York City in its GHA, what chance does your property have to be noticed, unless it bought a sponsored listing i.e. a paid GHA listing? Nil.
The same underlying principle is used in the Google Ads Program (GA) and its sponsored listings (paid search) vs free/organic listings. Or by Expedia and its Travel Ads sponsored listings.
Google's latest move is nothing more than returning to the old Yellow Pages business model: every business gets a free listing, but in order to stand out from the competition, you need to buy a sponsored listing.
In addition to luring more hotels join its GHA program, Google's latest move has three self-serving objectives:
- Increase GHA's metasearch market share and put an end to metasearch-only players like Trivago.
- Provide a replacement for the lost revenue and traction from hotels and OTAs in their main ad category - Google Ads. Last year Booking and Expedia alone slashed their Google Ads spend by $6 billion; all major hotel chains and independents paused or decreased their GA spend many times compared to their pre-COVID levels.
- Increase competition in the GHA Program by saturating each destination with these new “free” listings and forcing OTAs and hotels to buy the highly visible sponsored listings, which means higher CPC, CPA and CPS (Cost Per Stay) referral fees and revenue for Google. The more active hotels in GHA, the more potential revenue for Google, it is as simple as that.
Should hoteliers join the free GHA program? Of course, especially its Pay-Per-Stay business model. Hotels should take advantage of these free booking listings in the same manner as they take advantage of the free organic listings in Google Search, free Google My Business local listings and free YouTube profiles.