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12/21/2021

How Suppliers Can Benefit from the Evolution of OTAs and Metasearch

Travelers are not rediscovering the world, they’re reconnecting with friends, family and colleagues in a category we call ‘social leisure travel.’ This will shape where and how they book, as well as the channels where you can reach them.
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Family Travelers at Hotel

Traveler habits are changing again, and as we get a clearer picture of the post-pandemic traveler booking journey, we can begin to use these observations to evolve our distribution strategy toward a more optimal channel mix.

Security and safety concerns continue to impact where we go and how long we travel. At least for now, travelers have lost their appetite for far-reaching destinations with new and unique experiences. Rather they’re reconnecting with family and friends in familiar destinations in what we call “social leisure travel.” And this will shape how and where we book travel.

For hoteliers and hosts, this presents an opportunity to re-examine your distribution mix and build a more holistic strategy toward driving demand through the lowest-cost channels. More hosts and hoteliers are using email campaigns, direct channels and metasearch opportunities – partnered with a great booking experience – to reduce their dependence on OTAs while building better brand loyalty.

The metasearch landscape – particularly driven by new features from Google and TripAdvisor – caters nicely to the new leisure-driven traveler. What both companies bring to the table are new programs and opportunities that appeal to hosts and hotels directly, in addition to their advertising revenue-driven models.

Hotels need to have their inventory, availability and rates on Google today, as it’s the largest search engine in the world, of which a healthy share are travel searches. If you’ve got good ratings and reviews on TripAdvisor, consider its new membership program, TripAdvisor Plus.

Google, TripAdvisor Move to the Forefront

Google is the world’s dominant search engine, owns the biggest mobile operating system in Android and runs the behemoth video site YouTube. It holds 29% of the global $455 billion digital ad market, according to eMarketer, followed closely by Facebook. Both tech giants are benefiting as companies that scaled back on advertising last year during the pandemic pump more money into marketing.

In 2019, 10% of Google’s ad revenue came directly from Expedia and Booking.com. The OTAs will continue to be big business for them, but not to those previous levels. At the same time, Google has looked to diversify and replace this loss of revenue – which has led to more resources and innovation around its own metasearch product.

In recent years, Google has moved from a Pay-Per-Click model and introduced a Pay-Per-Stay model, which has made it easier for hoteliers to process ad spend as the invoice is issued post-stay. Then, the company introduced free hotel booking links, an organic way to get free placement at or near the top of the search results.

These are huge changes to the way hotels and hosts can drive direct traffic.

While corporate travel continues to find its footing – and may be permanently reduced – lodging companies can use metasearch to capture new leisure guests.

The Impact to Your Strategy

For hotels and hosts using Cloudbeds to provide Google Hotel Finder with content, rates and availability, early data shows Google is contributing about 5% of their overall demand. However, these guests potentially would’ve booked on an OTA, so we can’t claim Google drives incremental business.

Each hotel’s distribution strategy and mix will be unique to its demand drivers, and revenue and marketing teams should know the relevant channels best. Start with knowing your customers – ask them questions like “how did you find us?” and “where are you coming from?” – as these drivers are impacting where you need to be present. Don’t write off the niche booking channels.

Where OTAs fit in your distribution strategy starts with your visibility needs. If you’re a new property or an independent without brand support, OTAs provide an opportunity cost for just being visible, which is an important first step.

Relying less on OTAs for demand is a long play. But here are some other digital strategies you can enact to replace third-party demand.

Leveraging Geolocation. The cell phone in our pockets is a game changer for hotel marketers, and we can begin to target guests through geolocation and search. Start by ensuring your property is present on Google Maps.

Redefining Loyalty. Loyalty program levels need to be reshuffled completely, but the focus should shift from book-direct programs to using data to track travelers’ preferences and provide instant rewards. The subscription models are an interesting approach that we will continue to monitor.

Shifting Spend. Move some of your newly released OTA advertising budget into smarter initiatives like geolocation targeted advertising and other unique mobile booking experiences.

As you re-evaluate your post-pandemic channel mix, consider making incremental adjustments toward less costly channels. Expect direct efforts, including metasearch, to only move the needle 5-10% in the first year of your new strategy, but consider how much top-line revenue that would save annually.