Apart from the obvious profitability implications, direct bookings allow businesses to take control of the customer journey and collect more data to personalize the customer experience while providing opportunities to increase incremental spend through effective marketing of ancillary products and services. By leveraging their own booking channels, hotels can reduce costs, increase revenues and drive loyalty without being subject to the rules and algorithms of third-party booking engines.
However, the marketing reach and vast distribution of these third-party platforms can be enticing, especially for brands that wish to broaden their distribution or large properties that need to fill more rooms.
Booking.com is still the market leader in the UK and took 67.7 percent share of the European OTA market in 2019, according to Statista.com. However, over the past few year, Google has been changing the way it works with hotels, and its redeveloped Google Hotels platform, armed with its powerful Hotel Ads, now poses a huge threat to these OTAs and presents a great opportunity for hotels.
What are Hotel Ads?
According to Google, Hotel Ads display your hotel availability and rates on Google Search and Maps.
Much of Google’s success has been a result of its focus on the customer experience. Hotel Ads engage future potential guests’ browsing by serving up hotel photos and authentic customer reviews when searching for hotels in a city, sending them to a hotel’s website to book direct. While OTAs have often dominated the first page of Google’s Search Engine’s Results (SERPs) page, processed reservations and charged their commissions as a result, hotels can now advertise within the framework of Google Hotels and drive reservations directly to their own booking site.
While Google Ads serve the purpose of driving brand awareness, targeting visitors at an earlier stage in the funnel, Hotel Ads are more focused on conversion by displaying rates, availability, location and driving traffic to the hotel’s website. Hoteliers have flexibility when setting maximum rates of commission, room types and availability through Google’s bidding algorithm and have the option of leveraging Google’s automated systems to adapt to periods of high and low demand. Hotels pay commission only when the guest stay has actually occurred, a different approach when compared to some OTAs.
According to research by Skift, approximately 10 percent of hotel bookings are acquired through Google Ads and Hotel Ads, with the remainder coming from OTAs, direct marketing and other channels.
How can hotels drive direct bookings through Ads?
Hotel Ads are an integral component of SERP ownership, maximizing as many avenues to book direct as possible. It’s important to attract potential guests into a direct booking funnel as quickly as possible rather than allowing them to be tempted by an OTA, where other hotels will compete, commission rates will be incurred and guest data will be unavailable.
It’s generally recommended that hotels should bid on their own hotel name and have a mixture of both Google Ads and Hotel Ads, even when they appear first in an organic search, as it allows them to command more primary real estate in the SERP and capture visitors at different stages of the funnel. Bidding on the hotel’s own name also helps to protect the brand so it appears as an “official site” in the hope of deterring third-party bookings. Hotels can witness up to a 35 percent net uplift in booking traffic from having both Hotel Ads and their property rank first organically, showing that this combination is complementing not cannibalizing bookings.
To attract a bigger audience higher up in the consideration phase of the funnel, hotels should also consider bidding on wider-reaching search terms, such as 5 Star Hotels in Dubai, Hotels near Times Square or Countryside Hotels in the UK. As these search terms are broader, there can be stronger competition and therefore it might be quite expensive, so testing and measuring ROI is key to having an effective strategy to capture incremental bookings.
Hoteliers manage everything via a Google My Business account. It’s important for hotels to upload quality photos and videos, and highlight special offers, discounts and unique features. Google reviews left by customers should be regularly reviewed and replied to, as such engagement inspires trust with potential customers, provides data to potentially enhance the customer experience and improves organic search ranking. The booking process must be easy for visitors once they land on the hotel’s website, giving them the confidence to book directly. The hotel’s website should have a fast loading, simple and mobile-friendly booking engine. According to Google, an easy-to-use website is more important for high-value travelers than reviews or loyalty programs. A clunky, slow website that hasn’t been optimized for mobile may well damage conversion rates, which will not only cost the hotel unconverted revenues but could be flagged by Google in their Quality Score and increase the cost of ads.
What are the benefits of capturing direct bookings?
Direct bookings made on a hotel’s own website are always the most profitable, but there is also another reason: data. Ever since The Economist declared that “the world’s most valuable resource is no longer oil but data,” this statement has been a hot topic within many industries. For hoteliers, having access to first-party data, essentially owning their customers’ data, allows them to nurture a relationship with their guests and offer highly personalized experiences based on their behaviors and interactions at every guest touchpoint. This provides an opportunity to drive loyalty and growth and develop marketing campaigns tailored to their passions and needs, attributing to the customer lifetime value.
The fact that Google is making such big moves with their Google Hotels platform should not be underestimated. Direct hotel bookings started bouncing back quicker than OTAs as travel started to return after various lockdowns. This was partially due to Booking.com and Expedia cutting their sales and marketing investment in 2020. While this is likely to have cost Google billions of dollars in advertising revenue last year, they may well have found a longer-term solution by cutting out the OTA middle person and working directly with hotels. With a partner who is focused on the customer experience, who has access to more data, more marketing reach than anyone else on the planet and whose name is literally the word for internet search and who now wants to drive direct bookings, hoteliers may have found their perfect ally.
Halo Business Consulting Ltd,