For hoteliers who have enjoyed the lower-cost option of metasearch sites and their ability to drive traffic direct to your website, the landscape is getting quite puzzling. If you’re not monitoring closely, your marketing budget could take an unexpected hit in 2016.
Kayak, probably the most prominent hotel metasearch site, introduced to users the option to book directly on Kayak nearly five years ago. More recently, however, TripAdvisor and Google have both followed similar routes, moving from cost-per-click metasearch options to commission-based booking channels.
In recent months, we’ve seen some big-time players jump on board; both Booking.com and Marriott signed on with TripAdvisor’s Instant Book platform, and Expedia executives say they’re considering working with Book on Google.
This caused the folks over on HSMAI’s Digital Marketing Council to take notice, and a few hoteliers and digital marketing experts sat down last week to discuss what these new “pseudo-OTAs” mean for hotel marketers.
First, all participants agreed that despite what the companies are touting, neither TripAdvisor Instant Booking nor Book on Google are direct channels and in fact more closely resemble OTAs.
“A user goes to Expedia, researches properties, finds a good property at a good price, creates a profile, gives their credit card information and receives a confirmation email,” said Max Starkov, CEO of HeBS Digital. “From a consumer experience this is the exact same as TripAdvisor Instant Booking or Book on Google.
“From a hoteliers experience it’s the same,” he continued. “Once the booking is consumed then the hotel receives the booking through the CRS and ultimately the same happens with TripAdvisor and Google.
“In my view these are not direct bookings because you have an agency acting as a middleman between the hotel and the end user, and this agency charges a commission of anywhere between 12-15%.”
Loren Gray, founder of Hospitality Digital Marketing, said the fact that TripAdvisor and Google own the customer data means they are not direct channels.
“Anytime I have to share data with anybody who provided the business then it’s not direct because direct would mean I’m receiving the data with the consumers’ interaction with me,” he said.
“They’re not the merchant of record, we’re the merchant of record, but that doesn’t make it a direct booking,” added Dan Wacksman, senior VP of Global Distribution for Outrigger Resorts.
Wacksman said Outrigger is evaluating both platforms and will most likely participate in both, simply because of the high traffic TripAdvisor and Google receive and the fact that if Outrigger isn’t displayed, their competitors will be.
“We’ve been playing in Kayak’s CPA model but they’re sending the visitors over to us. We get their data, we get their cookies, so it’s something worth paying for,” he said.
He also said Kayak provides “better economics” and that both Google and TripAdvisor’s costs more closely resemble the acquisition costs of traditional OTAs.
“When you start bringing the economics up to an OTA level then it’s a different story,” he said. “I was a little bit surprised by the big brands signing onto it. It used to be the only ones that would come up are smaller guys trying to squeeze into the space, now Booking.com comes up.
“I would like to say, ‘No we don’t want to do it, they’re training people to go there instead of direct.’ But I think we’re going to have to go in there and test it.”
Starkov said there are other options. TripAdvisor, he said, still provides banner advertising and business listings, which he said drive solid returns to HeBS clients. He said he recommends most hotels continue to play on the “left side” of TripAdvisor’s user interface, which is the traditional CPC side. The right side, where Instant Book participants are listed, is a costly proposition.
“The left side is pure advertising which you control, you manage the budget, you can shut down the campaign when you don’t need help, you can boost your budget when you need the most help,” he said.
“It’s not just saying turn it off and turn it on and saying we have to be there because if we’re not then someone else is,” Gray added. “For hoteliers, they have to look a little more in depth at where my business is coming from and how does TripAdvisor affect that channel of business.”
Wacksman said TripAdvisor Instant Booking participation is easier to justify on the P&L statement.
“It’s a lot easier for me to justify commissions – that doesn’t impact my marketing budget. I can’t endlessly increase my marketing budget but I can essentially endlessly increase my commission budget,” he said. “One of things we talk about internally here is how we look at bookings. You can’t just look at it at the net rate level and ADRs because if you’re netting it out at the bottom of the commission, it changes the way you look at the business.”