I am a big fan of Google and as a traveler also a big fan of the online travel agent (OTA) business model. What’s there not to like? I get a bunch of hotels competing for my reservation, I am able to read reviews from my fellow travelers and I can make an informed decision based on price, reviews or location. However, as an expert in online hotel marketing, I’ve discovered that hotel operators, particularly boutique hotels, really aren’t getting a fair shake thanks to their lack of marketing savvy and opportunistic practices between Google and OTAs that take advantage of this. Here I expose these practices and offer some solutions to hoteliers to make them less vulnerable.
Google and OTAs: the Bad, the Ugly and the Good:
Setting the Scene: Booking.com and Google AdWords One of the biggest OTA players in the market is Booking.com, owned by Priceline. A comparative look at Priceline’s share price in 2005 with where it is now clearly demonstrates how profitable the online booking space is. Follow the money trail, and you quickly realize that in addition to Priceline, this new emerging online travel sector has been very good to Google as well. Priceline alone spent north of $60 million per year on Google AdWords—$20+ million from Priceline and $40+ million from subsidiary Booking.com. I had to stop and ask myself, “Why would a company pay so much money on Google AdWords if there wasn’t some sort of unbelievable profit in it for them.” So I decided to do some deeper investigating. I first did some research on Booking.com and saw that their commission structure ranges between 12% to 18% per reservation. Based on pure traffic to these OTA websites, as an hotelier you’d be stupid not to have your property listed. Once you filled out your information and uploaded your best pictures, you are all but guaranteed to get reservations, so where’s the downside? What is wrong with paying the 12% to 18% if hotel occupancy is full and you are making money from your restaurant, bar, spa and other amenities? Why would you need any other sort of marketing? After all, you know your marketing costs—they are between 12% and 18% per reservation. I sat back and mulled over that statement, “Why would I need any other sort of marketing?” Surely the cost for a social media manager, Google AdWords manager, content manager, email manager and the host of other interactive marketing strategies will not cost me less than 12% per reservation? The short answer is no. The long answer requires some more analysis and exposure of the conspiring relationship between Google and the OTAs. An understanding of their opportunistic techniques will yield better results in your favor as a hotelier as you learn to reduce your reliance on an OTA. Real Life Case Study: The Bad, the Ugly and the Good As a hotel operator, one of the first things you can do to protect yourself against Google’s OTA-favoring practices is to search Google for your name as well as your competitor’s name and make note of what you see. Doing some local searches in the New York area (see below of both large chain hotels as well as local boutique or mom-and-pop hotels, what I found was incredible. Let’s start with a typical New York Hotel and discuss the bad, the ugly and the good as it relates to Google’s skeptical relationship with OTAs.
New York Hotel Google Search The Bad – Notice that the OTA has nabbed the top spots in the Google search result page for this hotel, albeit it through Google AdWords. Because the hotel has not trademarked its name or if it has, hasn’t submitted it to Google (https://services.google.com/inquiry/aw_tmcomplaint), the OTAs are allowed to run rampant through Dynamic Keyword Insertion. Every listing at the top of the page and in the right hand column is called the hotel name. Search a corporate hotel like the Hilton or the Marriott and you see no OTA brave enough to use their hotel name in an ad, or Google has politely informed them that they are infringing on the corporate hotel trademark name. Take note: these brand name keywords are a lot less competitive than a geographical location keyword, for example “New York Hotel” or one with a modifier “cheap or best New York Hotel”. Thus, just to ensure a booking, for a few dollars for a Google AdWords click and a well optimized landing page, the OTA will be ready to bypass the Hotel and show browsers another 600 hotels in that area. So pull out a calculator, and I’ll walk you through the math. According to Google Keyword Planner, the OTA will pay between $1.34 – $1.53 per click for this particular New York Hotel (below). That is a great savings compared to a more generic keyword like “New York Hotel” which would cost $10.06 per click. Conservatively, if it takes 10 clicks per conversion, it costs the OTA between $13.40 – $15.30 per reservation. According to the rates listed in the OTA’S, the average night at this particular New York Hotel right now costs around $225 so with the OTA commission between 12% – 18% per night, the OTA is making between $27 and $40 per night from this particular New York Hotel. If the guest is staying four nights, the OTA walks away with between $108 and $160 in commission from the hotel, not bad for just a $15 cost that is a nice profit in anyone’s book!
Google Keyword Tool The Ugly – Now it’s time for the ugly. I don’t mind if the OTAs are allowed to have the same hotel name in their ads, as that is a quick fix through the Google Trademark infringement policy, but what really irks me is that Google is allowing AdWords to be embedded in the organic listing result as seen below. I believe this is an unfair advantage to the OTA, as it misleads the public into believing that this is part of that hotel reservation system. I have never seen a hotel listed prominently in this dropdown format; it is always favoring the OTAs with their displays listed prominently and the actual hotel simply listed as a footnote. There seems to be no way to switch it off or remove it from the hotel’s organic listing so it forces the hotel to pay the higher OTA commission percentage if this option is selected. This seems to be a worldwide rollout as I have seen this on Google Sweden and Google France search result pages. Meta Search Result
The Good – Smaller or local boutique hotels should seize all of the free tools Google has to offer to protect themselves. If you don’t, you allow yourself to be reliant on the OTAs as your only stream of revenue, rather than building a self-sustaining marketing eco-system that for the most part is free to set up. Here are my Top 5 Tips for Hoteliers to improve their Google Organic Rankings
DISCLAIMER: I have blacked out this above mentioned hotel as they politely ask not to be mentioned in this case study.