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?
Metasearch certainly sits in the grey area between marketing and revenue management. It is one of our fastest growing media channels, not surprising when you consider how influential it has become as a major source of reservations in the last few years. We typically have two types of metasearch customers:
1) The Marketing Leader – They're managing the hotel's marketing budget and media plan and should have metasearch as a core tactic. They typically prefer a media budget on a CPC model that delivers ROI.
2) The Revenue Leader – They're managing the hotel's revenue and distribution channels. With a focus on acquisition cost and channel share, they tend to favor a commission model. The advantage being you only pay for consumed bookings without any upfront cost.
A good provider has enough flexibility in their platform and their service model to allow for either model (or customer) above.
There's also the question of property type and which model suits best. We've had some discussions recently with seasonal properties who benefit more from a commission model because media budgets tend to be reduced at properties that close or have low demand for a few months each year. So seasonality and property type are also important considerations when deciding which metasearch model is the best fit.
Many of the hotels and management companies that we work with have a much closer relationship since covid between the two disciplines of marketing and revenue management. The real catalyst for that has come out of necessity due to staff shortages and more focus by everyone involved on hotel profitability. So perhaps covid has brought an attitude shift towards better goal alignment across these functions and metasearch is just one example where it pays to have a synchronized marketing and revenue function no matter the metasearch model you choose.