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?
I am lucky enough to have lived the evolution of metasearch advertising from day one. Ten years ago, I was working for what became one of the major metasearch management platforms in Europe, so I followed the evolution of the phenomenon quite closely. Recently, I've had a long LinkedIn discussion about this subject: with metasearch engines evolving from advertising platforms to distribution channels, should marketers or revenue managers take care of them? The question is valid, but it tells only a part of the story. The CPA approach in meta is nothing new, but it became extremely popular with the introduction of GHA PPS. With less risk involved, it's no surprise that most properties decided to treat their metasearch ad strategy as an OTA, especially with cancellation rates rising post-COVID. That being said, some properties can still benefit from a CPC approach, especially hotels with low cancellation rates and located (or making business) in areas where there is not much competition online, so that the clicks remain relatively cheap. Moreover, when advertising in Google, hotels can bid differently based on many variables, such as check-in date, length of stay, check-in day of the week, and booking window, maximizing their visibility where the return is higher and, consequentially, decreasing the cost per acquisition. If properly managed, a CPC campaign can generate high ROAS with an investment that's a fraction of the average metasearch commission. On the other hand, advertising in PPS or pay-per-booking doesn't require any understanding of the platforms, and hotels don't have to allocate man-hours to manage the campaigns. It's simple plug-and-play advertising. Personally, I have clients using both approaches, with some of them even practicing hybrid strategies: CPA on certain months of the year and CPC for the remaining ones. Ultimately, the goal is always the same: maximizing impression share and conversion rate, with the lowest possible CPA. So, if it's true that most metasearch engines do offer commission-based solutions, this doesn't mean it's always the best way to go.