February 15, 2016 internetaffected

Hotel revenues in the Online Marketplace – Making sense of it

In the first of a series of Insights, Hotel Revenues in the Online Marketplace, we provide some context to the problems being faced by hotels trying to compete with OTAs (online travel agents) in the online marketplace. We also explore some of the problems that junior managers face when attempting to identify budgets that can be used for online advertising, and provide some tips for helping them make the case more strongly to decision-makers.

Strategies we have implemented have allowed our clients to compete with OTAs on a much stronger footing because our services increase the share of hotels bookings they receive directly. We accomplish this through a combination of loyalty schemes, paid advertising programmes and social media marketing.

One of our clients paid their annual commission bill to an OTA out of the new revenue generated from using our services.

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Current problems for hoteliers

As a hotelier, when you go to Google and type in the name of your hotel, the usual OTA (Online Travel Agent) suspects appear right at the top of the results. How can you compete and fix that? Perhaps you should purchase your hotels name as a keyword and then engage in an auction based bidding war to come out on top. As a first approach, and without the proper mechanisms in place, it is not something we would recommend because the likely outcome will be a hemorrhaging of budget, and the feeling that brand campaigns don’t work, when in fact they can when managed properly.

“I can’t get the budgets”

You might be reading this as a Marketing Manager who has difficulty getting approval from Senior Management for budgets that can then be used for the so called brand name advertising campaigns – and then you may also have this to contend with,

“we don’t need to buy our hotel name as we are already listed on the page, it’s a little further down but people will find us anyway.”

Showing the mobile example

While traditionally the computer desktop was the preferred way to access the internet, over the past few years (accelerating more quickly in the last 12 months) there has been a seismic shift in the way people consume information. Nowhere has this changed be so marked than in the paid advertising space on mobile. Perform any hotel brand name search on a mobile and the results shown to a user are exclusively paid for. There is no opportunity for the user to contrast the results with organic links (as can be done more when the same results are viewed from a desktop computer) because the entire mobile display will be a filled with paid advertisements.

That means that if your hotel is being searched for on a mobile device, and the searcher is in a hurry to find the best rate, there is a very high probability they won’t even see the hotel website, because it is literally off the screen. Yes, there will be some that still go looking for the hotel website, but it will be a fraction of those searches performed for your hotel. In fact, armed with transaction data for your hotel, we can estimate how much the advertisement being shown in position number one is costing you in lost business.

It’s going to get worse too

Yes, the situation is actually going to get worse (i.e. more paid advertisements, less visibility for the hotel) because this has been the trend for the past five years. At every possible opportunity Google or Bing (to a lesser extent) are placing hotel websites further and further down their natural search (organic) listings; either by making changes to the design of the search results pages, or by topping off the page with mix of paid adverts, search engine owned products (Google Hotel Finder), or 3rd party meta-search results.

Best hotel in….

If you have worked in hotel marketing for any length of time you may also remember a time when your online marketing agency was delivering search ranking reports for keywords such as “best hotel in (your location)” or “hotels near (your location)” and/or a combination of other similarly themed keywords.

However, if you run those same keyword searches in today’s indexes, the search results are very different. The natural search listings have changed from evidencing hotel websites to favouring familiar names in the online travel space, and their most successful affiliate partners. We conducted an experiment to look at how well independent hotels were being represented in the Google search index and the results were shocking, for independent hotels.

EXPERIMENT: Independent Hotels Organic Listings Analysis

Goal
To find out how many independent hotel websites could be found in Google organic search based on a list of popular search terms suggested by Google.

Approach
We queried Google with the following search query “best hotel in…” and then rotated sequentially through all the letters of the alphabet. Each time Google suggested keywords (which appeared as the keywords were entered into the Google search box) we made note of them. After completing the keywords variations we had collected a list of 260 keywords. These keywords were then typed, one by one, into Google search and all website addresses that featured on the first page of the search results page were transcribed to a file.

Methodology
After collecting the website results we filtered the list of website addresses; first by removing the duplicate website pages, then by removing any duplicate domains in the list (in so doing the list of remaining websites would contain only unique web-properties).

Results
After analyzing the list of remaining websites, no independent hotel featured in any of the remaining results.

2600

Total Websites


61

Unique Websites


6

Hotel Chains


0

Independent Hotels in search results

What can hotels do?

Although the picture might look bleak for hotels seeking direct bookings (no opportunity to compete in the free search space due to the prevalence of affiliate based competition), the reality as we see it, is actually quite different.

Online users are becoming savvier at searching out deals, and the technological solutions that makes OTA advertising follow their visitors wherever they are, is also available to hotels.

By implementing our range of services, the four and five star hotel clients we work with have been able to make back, in direct bookings, what they were paying out annually in commissions to OTAs. In addition to revenue our hotels clients accumulate newsletter subscribers that are then willing to provide additional information so they can be sent offers that interest them. It goes without saying that because hospitality is your trade that your guests will be looked after, and through every touch point of your marketing (from sending responsive newsletters to simply providing them with a dedicated contact point) this quality of service will be communicated. These are the formats of guest retention that OTAs simply cannot compete with due to their size.

Link building is not dead either (despite what is popularly published), and our specialized travel services ensure that your organic revenue channel remains strong year on year, even if it seems the natural listings space is being over-run with OTAs.

For us, OTAs and third-party channels will always just be affiliates and therefore secondary to the main product: your hotel’s offering. Take any OTA company name and add the keywords “Bad” “poor” “terrible” to a search query and there are websites dedicated to people’s poor customer experience with them. Objectively these complaints could be filed under affiliation or re-seller problems.

In contrast to OTAs, our services increase hotel direct booking revenue, bring hotels closer to their guests, and ensure hotels are less reliant on search engines for delivering room bookings.

In the Next Post

We’ll provide a framework for helping you to decide, independently of what your agency might be telling you, whether to keep your hotel brand search campaigns switched on, or whether to switch them off completely!

Need help?

If you are a four or five star hotel and would like us to provide an independent audit of your online marketing and direct bookings strategy, please use the contact form found at the bottom of this page to get in touch.

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