Hotel distribution continues to evolve. And, increasingly, Google sets the agenda for hotel owners, operators, brands, and OTAs alike. Here’s why that matters for your hotel this year.
Let’s talk distribution for a minute. Yeah, I know, distribution is one of the least sexy aspects of the hotel industry. It’s also one of the most important, especially for hotel owners and independent hotel operators. Hotel owners, operators and brands looking for ways to reduce costs and increase profitability need to continue thinking about how they’re going to acquire guests in a cost-effective manner. And that’s about to get much, much more interesting.
Why? What’s going on here?
In a word, it’s Google. Google is what’s going on here.
Google isn’t the 800-pound gorilla of the hotel industry. No, it’s a giant, ferocious, charging beast that’s left the industry’s 800-pound gorillas scurrying for cover. Google is stealing mindshare and margins from online travel agencies and other intermediaries every single day.
No less an observer than Expedia CEO Mark Okerstrom plainly stated that Google represents his company’s biggest competitor. In his own words, “The internet has been littered with the bodies of companies put out of business by Google.” Okerstrom’s must make sure Expedia isn’t one of them.
He’s right. Guests increasingly use Google as the first stop in their decision-making journey. And with recent integrations of Google’s artificial intelligence-powered, travel booking-capable Assistant into Google Maps on Android and iPhones alike, expect even greater use of the search giant when guests plan their stay. There are millions of searches on Google every minute, with more than half of those on mobile and roughly 20% of those using voice. Everyone’s scrambling for share, further driving up the cost of acquiring guests.
Expedia and Booking.com recognize this shift, spending more on marketing and advertising to drive more guests to book with them. Booking.com spent somewhere in the neighborhood of $1 billion with Google in Q3 alone last year.
At the same time, as Google increases the amount of metasearch and paid inventory in its search results page, it’s also driving up costs for individual hotel owners and operators. Worse, without solid connectivity solutions—which many independent hotels lack—hotels can be shut out of Google’s latest product offerings and miss out on direct revenue opportunities altogether.
So how can you ensure you earn your rightful place at the table and gain booking share without significantly increasing your cost of guest acquisition? Here’s how:
Develop a comprehensive distribution strategy that includes both search and metasearch
Search is a distribution channel. And the search landscape gets more and more challenging every day. SEO, paid search, voice search, metasearch, AI, schemas and whatever else Google rolls out next can’t be considered in isolation. Each plays a role in driving guests towards your direct booking channels and in delivering flow-through—positive or negative—towards your bottom line.
Similar thinking should shape your OTA agreements. Do your internal team and agency partners understand how to best make these work together to deliver the lowest total cost of distribution for your property? This is critical question that your property must get right. Otherwise, you risk continuing to fund OTAs bidding against you in search, driving up your costs and further risking your property’s distinct value proposition.
Offer destination content to gain guests earlier in their decision-making journey
Data shows that guests who start their research on OTAs book on OTAs. I strongly suspect the same will be true for Google before long, most likely in the form of metasearch and partnerships. Already, Google displays a remarkable number of paid listings and metasearch results before getting to organic results.
Put more simply: Guests who don’t come to your website never get the chance to book direct. It’s critical you use content about your destination to move deeper into the long tail of search, getting guests to your site early in the journey and for terms that aren’t flooded with paid/metasearch offerings already. Google’s AI-driven search results place significant value on quality content. Give them, and your guests, something worth finding.
Focus on increasing conversion rates on direct channels
Here’s a simple truth: It’s always going to cost you something to get guests to contact you. You’d damn well better make sure they convert. It doesn’t matter if they’re coming to your website or calling your reservations line. Every lost opportunity increases your cost.
Take a close look at where your reservations come from, how effective your direct channels are at turning interest into action, and how to improve those results to get the best return on your spend.
Ensure your connectivity options support Google—and their potential future competitors
Do your direct channels appear in Google’s metasearch results today? Or does your property only appear via intermediaries? The latter is a clear sign you’re paying more for reservations than you should—likely much more.
Make sure your team is working towards placing your property’s direct channels front and center on Google’s metasearch tools, as well as on other metasearch partners who offer the opportunity to challenge Google in the future. Or accept the fact that you’re always going to pay more for bookings than you should.
Distribution funnels through a limited number of chokepoints and gatekeepers. And, at least for the foreseeable future, the number of gatekeepers continues to shrink towards just one: Google. If Expedia worries about Google eating its lunch, you might want to give them some thought, too. And then you want to put those thoughts into action.
Google may be the beast that 800-pound gorillas fear. That doesn’t mean it should scare you. Individual property owners and operators may not be 800-pound gorillas. But unlike the big guys, they can run a lot faster. Think about your distribution strategically, and you’ll outrun the big guys for a long time to come.
Tim Peter helps hotels and resorts put digital to work to grow their business. He has developed innovative e-commerce and digital marketing programs designed to increase sales and revenues. Prior to founding hospitality consulting firm Tim Peter & Associates in 2011, Tim led the world’s largest hotel franchisor and the world’s premier independent luxury hotel representation firm in driving billions of dollars in revenue for hotels and resorts around the world. He can be reached at timpeter.com/hotelmarketing or firstname.lastname@example.org.
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