Hotel organisations are grappling with issues when it comes to making the most of their relationship with meta-search engines. And these aren’t just related to competing with OTAs.
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Are hotel organisations astutely capitalising on the increasing prowess of meta-search in the battle to garner the attention of travellers early in the booking funnel?
This is a relevant question as hotels are trying to settle down for CPA costs that are between OTA margins and other traffic generation site like Google. Plus, hotels companies are keenly looking at the option of “facilitating” hotel bookings via the meta-search route.
Hotels, collectively as an industry, lag behind OTAs in the game of traffic generation. There is no denying that established OTAs overshadow hotels with their hefty marketing expenditure in their arsenal. But there is more to it as hotels seemingly are grappling with a couple of other issues, too.
Structural issues
One aspect that some believe is exerting pressure on hotels and seemingly impacts their propensity to capitalise on a meta-search engine’s capability is the ownership model of hotel organisations.
An industry executive pointed out that hotels are either owned, equity partnerships, hotel management agreements or franchise models.
“The intrinsic problem with this is that the sales and marketing fund is based on a % contribution of top line revenue, and that is sometimes not enough to cover the investments required for online marketing spends,” said this executive, who works with an established hotel brand. “Some hotel chains have moved to a commission % model for increasing online spends. There are companies which charge a 5-10% commission for all bookings received through paid searches so that this money can be reinvested into SEM.”
So is there a need for ownership models to evolve to capitalise on online marketing?
US-based Dan Wacksman, senior vice president, global distribution at Outrigger Hotels and Resorts, isn’t too sure about the same.
“If something has good ROI and then it should be explored within the commission structure or within the marketing budget,” said Wacksman.
“Most meta now offer commission model and CPC/CPM model so you can play in either area. To me the challenge with meta is that that you are often working with companies who are bidding against you for your own brand terms, thus driving up your search costs and then within the meta search you are bidding against your OTA partners for your own listings, which strategically might not make the most sense,” said Wacksman.
Confusion
As the number of meta-search engines have risen over the years the allocation of resources and budget too, has gone up. A direct consequence is the battle with OTAs. This isn’t feasible as many advertisers end up spending multiple times for the same conversions.
“Meta search sites are becoming more and more confusing causing customers to click many times in search of the cheapest rate, this is great for the Meta search companies who get paid for each click but not so great for advertisers. The CPA model is probably more rational model for those buying the advertising in Meta and in fact you see the lines between OTA and Meta getting more and more blurred with OTA showing comparisons and Meta offering booking capability so CPA or Commission models are become more prevalent,” said Wacksman.
Tracking
Hotel executives also talk about technology limitations that are about assessing what’s really happening with traffic that is being driven by meta-search, and in turn explaining the same to entity that owns the hotel.
“Probably the single biggest issue is tracking, both in the sense of tracking bookings that come on last click as well as coming up with a rationale attribution model,” said Wacksman.
A hotel executive shared that while the technology does exist to determine which booking came from which click etc, it is difficult to manage this with amendments and cancellations and once in a while there will be an audit which will ask you to justify the payment for online marketing. “I feel that online marketing needs to be looked at as a strategic investment rather than a fund in the long run. I also think traditional asset management and real estate based ownership models also need to evolve to have a more conducive view of online marketing,” said the same executive.
It is clear that hotel executives need to evaluate all the options closely. One has to be astute enough in the game of real-time hotel inventory availability/ pricing, and optimise campaign, budget and bid management.
