Large Internet companies are evolving with a common objective: occupying the whole life cycle of the client, focusing especially on the most interesting and juiciest part from a money point of view, the booking or the hotel transaction.
Historically, the life cycle phases have been occupied by the giants of the industry with well-defined limits. However, today, all of this has changed.
There is strong competition to occupy each and every one of these stages. There are two main reasons:
- The cost of client acquisitions is too high to just let them go to the competition at the drop of a hat.
- The monetization of some stages (as inspiration or sharing) is very difficult and, on the other hand, in others (comparison or booking) it’s high and accepted by the hotel, who is used to paying out commissions.
The industry’s leading OTA has managed to build loyalty in many of its users by making them go directly to Booking.com to choose their hotel, book it and share their experience.
The only stage of the life cycle that Booking.com doesn’t cover is offering price-comparison between the different channels. Booking.com counteracts this weakness with a triple answer:
- An aggressive “best price guarantee” policy which has made an impression on clients, something strange because, in fact, Booking.com rarely has the best price (for that, you just have to check Trivago or TripAdvisor to verify it).
- A loyalty programme, Booking Genius, where registered users access a 10% discount, which is surprisingly covered by the hotel who, as well as reducing its income, it is also admitting that Booking.com has a better price than its own website.
- A long-term strategy. For many clients, the simplicity, security and guarantees that Booking.com offers is worth paying for that little bit extra. For them, the Booking.com brand is above the price in terms of importance.
TripAdvisor has recently completed a full transformation of its business model. With more than 320 million reviews, it’s one of the leaders in the “hotel search” stage. Its product, TripAdvisor TripConnect, strongly introduces it in the “price comparison” stage and, recently, TripAdvisor Instant Booking in the “booking” stage, which makes it a full-blown OTA. Who could have warned Expedia, back in 2011, that they were letting go what a few years later would become one of its main competitors?
Google, the last one to arrive and ready to break the mould
Google is the undisputed leader in the inspiration stage (who hasn’t searched for “holidays with children” or “weekend breaks” on it?), but also in the “search” stage (e.g., hotels in the Canary Islands). Not satisfied with this, it has now launched itself to occupy the whole customer life cycle by firmly entering the phases of comparison and booking.
Google Destinations has arrived
Its recent and big commitment to close the circle. Only available on mobile searches for now, Google has surprised us all with a unique tool in this industry that should have Booking.com and TripAdvisor quite worried. Its name? Google Destinations.
Its objective is no other than to channel the inspiration and search of everything related with travelling and destinations by naturally incorporating itself in Google search results.
Once inside, Google tries to trap the user by offering everything he/she needs: information, photos, reviews, prices and, eventually, bookings. If Google gives me everything I need, why look somewhere else?
Without doubt, Google will offer plenty to talk about with this new tool. It’s too soon to evaluate its impact but is seems quite obvious that it will be a success and that it will find its place among users.
Where does Google Destinations get the hotel rates? From its HPA platform, which gathers them from the different OTAs and from the direct-sales companies (at Mirai we have had integration since 2013). Up until now, Google redirects the user to the OTA or to the hotel itself to complete the booking but I fear that this won’t last long.
Book on Google, or booking a hotel directly on Google
If Google is already dominating inspiration, search and currently entering price-comparison, it only needs to “attack” hotel bookings to close the circle and complete the user’s life cycle.
With this objective, Google is already trying its booking system in the United States, where the user never leaves Google, making it an OTA, at least in the client’s eyes. This new model is known as Book on Google, but there are still many details that are yet to be disclosed. We will impatiently wait for more details.
Same ending but different origin. Trivago was born a few years ago and become the main hotel price-comparison tool. Just like TripAdvisor and Booking.com, Trivago has evolved by always putting the user at the centre of the strategy (its real client and not the hotel).
It doesn’t just want to be a price-comparison website but also a hotel searching tool. For that purpose, it has bombarded us with television adverts with its catchy slogan “Hotel? Trivago”. This turn of events can easily be seen by comparing its TV adverts: Here is the one from 2011 and here is the most recent one from 2015.
Trivago also has plans to enter the hotel booking phase. This system, still in its beta phase, is currently only available in certain markets like Germany.
Threats but also opportunities
All of these changes create further confusion in an industry that’s already complicated in itself. Not being up to date means that you won’t be able to react in time and, eventually, these changes will affect your hotel in one way or another.
However, these movements are not only threats but also opportunities for hotels to sell more at a lower cost. If you play your cards right and you are not afraid of intermediation, you will benefit from it.
The fact that Booking.com, the leading OTA, completes the customer’s life cycle and its number of “direct” clients is growing is the worst possible scenario for you. These users will be captive of Booking.com and if your hotel wishes to have access to them you will have to accept their rules (quota, commissions, etc.) from now on. What is the difference between being a hotel owner or Booking.com selling you 60% of it?
That TripAdvisor and Google are launching their own booking systems is also not good news, since it’s another wall created between client and hotel. However, when lacking direct inventory, it’s a chance for you to feed it to them. If you don’t, the OTAs will occupy this space and carry on selling what you could be selling yourself with your “direct channel”.
The same happens with loyalty programmes. Will it be the next step for TripAdvisor or Google? While they don’t have them, you still have the chance to build customer loyalty with the clients that they may bring to you.
The changes on the Internet are very quick. Intermediation has more money and knowledge, so it’s normal that they update before anyone else. Competing with them from a technological perspective is impossible.
So the sooner you accept that the better. This is not your war.
Remember, however, that there is something that will never change and that we often forget: the rooms are yours and not the OTA’s. Bearing this in mind, you can fight with these changes, bringing them always onto your turf and not onto the OTA’s.
Recently, TripAdvisor notified users of a change in its security settings that does not affect the Business Listings traffic but that may interrupt its tracking in Google Analytics.
All of the websites that do not use the HTTPS protocol shall stop registering referral traffic on TripAdvisor through Google Analytics.
At Mirai, we have detected that traffic has not been tracked for some time on our clients’ websites, as you can see in the example below:
As an alternative to carry on accounting correctly for the Business Listings clicks, TripAdvisor recommends the use of a personalised URL.
How to do it
The implementation of the personalised URL is simple:
Log in into your TripAdvisor account and select “Your business”:
Select first the option of “Manage links” in “Contact Links Plus”:
Click on “Primary contact information”:
In the “Second contact type”, edit the field for the website address by adding the following extension: ?utm_source=tripadvisor&utm_medium=referral&utm_campaign=perfil_plus
The edited URL must look like this: www.mywebsite.com/?utm_source=tripadvisor&utm_medium=referral&utm_campaign=business_listing
(*) It is very important that the slash (/) always appears before the question mark (?).
If you have an offer created on TripAdvisor
You must also change the URL of the offer by selecting the option “Manage Special Offers” in “Special
Click on the edit icon:
In step 2 of the editing page, edit the URL of the offer and add the same extension: ?utm_source=tripadvisor&utm_medium=referral&utm_campaign=business_listing
The edited URL must look like this:
(*) It is very important that the slash (/) always appears before the question mark (?).
If your offer has a discount code
If your Business Listings offer has a discount code and the URL that you are using includes this code (e.g. www.mywebsite.com/?promo=tripcode), you will have to change the question mark (?) for an ampersand (&).
In this case, the edited URL must look like this:
You must remember that, from the moment that the UTMs are added to the URLs, the source/medium in Analytics will change. Therefore, we will still have the data but not a linear history.
If you have any questions or require help, contact your account manager.
The potential sales sources of Booking.com may be classified in the following way:
Not all of these booking origins are new sales for your hotel. Some of them just compete with other channels (including your own website) for the same clients (existing sale), thus unnecessarily increasing your distribution costs. On this post, we will focus on one of the most controversial sales origins carried out by all OTAs, which offers no value at all and that you should demand to be removed: the AdWords of your brand. However, how many sales do these AdWords represent over the total sales generated by Booking.com? The simplest thing would be to ask your Booking.com account manager. If he/she gives you the information (and compares it with transparent data), then that is great. You now have all the information you need to make the decisions that you deem necessary. On the other hand, this is information that they usually don’t share, information that account managers do not know of and that is managed on a different level. Without having the official numbers, at Mirai we have estimated it. We have strategically chosen 22 hotels that we work with that:
- Are preferred hotels in Booking.com.
- Have a good reputation and positioning in their destination
- Are strongly investing in AdWords in order to sell more on their own website.
According to our estimate, almost 15% of the total sales of Booking.com come from the AdWords with the hotels’ name/brand. This information varies considerably among hotels, with some of them standing at just 5% and others close to 35%. These differences are understandable, since we are calculating the weight that AdWords have over the sales totals, a quantity that varies a lot among hotels. For example, if you are a preferred hotel or are overriding commission, you increase your total sales on Booking.com without affecting the AdWords sales, which results in the weight of AdWords to increase or decrease.
We have focused on the first trimester of the year: January-March 2016. Out of the 22 hotels we analysed, we obtained the following information:
- Number of bookings that came through their own website
- Out of these bookings, how many were generated by the AdWords made by the hotel.
- The total number of bookings that came in through Booking.com (information provided by the hotel itself).
Estimating that the weight of AdWords of website sales is proportional to the weight of AdWords of Booking.com sales is wrong. The reason is that the total sales on Booking.com has more origins than the sales on the hotel website, such as the affiliation network, the SEO and SEM of generic words and the Booking.com traffic itself. Therefore, the weight of AdWords over the total of website sales is much higher than the same number on Booking.com.
Using information provided by Google AdWords on its console, out of the 22 analysed hotels we have extracted the following information:
- The percentage of impressions on the hotel AdWords.
- This same number of Booking.com (provided also by Google).
- The average position of the website in the results.
- This same number of the Booking.com AdWords.
In this example, we can see that the Booking.com advert appeared 80% of the time with an average position of 1.4, while the website one appeared only 52% of the time with an average position of 2.2. Once all of this information is on the table, we estimate the number of bookings through Booking.com generated through the AdWords with the hotel name, thus assuming:
- That there is a proven relation between the average position and number of clicks that each advert receives (there are hundreds of studies on this) where the first position may receive up to double the amount of clicks than the second one and up to three times more than the third one.
- That the conversion of visits that come from Booking.com via AdWords is similar to the conversion of the website’s AdWords traffic. You might think that the hotel’s Adwords have higher rate. Argueable. Booking.com, on the other hand, say that theirs are higher. We will estimate it as equal to be on the safe side.
Once we have the number of AdWords bookings, the last thing we need is to divide it by the total number of bookings on Booking.com (information which all analysed hotels provided) in order to obtain the weight we are looking for. Out of the 22 analysed hotels, these are the results by percentage:
- 0% to 5% of the total: 2 hotels
- 5% to 10% of the total: 8 hotels
- 10% to 15% of the total: 3 hotels
- 15% to 20% of the total: 5 hotels
- 20% to 25% of the total: 3 hotels
- More than 25%: 1 hotel
At Mirai, we will never tire from saying that intermediation adds value as long as:
- It generates sales that you cannot currently get.
- It generates sales that you can get to and does so at a lower cost than the one you have already.
- Generates sales while respecting the rules (rate control).
If you are occupying the space that Google reserves for AdWords, intermediation adverts (and, therefore, Booking.com’s) do not add any value. Removing them will not result in loss of sales and instead you will be empowering your direct channel while reducing distribution costs. If that approximate 15% of sales (or your hotel’s estimate %) that come via your hotel’s adverts did not come through Booking.com but rather from your own website, how much would you save on intermediation costs? That amount would directly go to the GOP (Gross Operating Profit) on your results account.
Is it a risk to remove your name’s AdWords by OTAs?
If Booking.com produces a lot of sales for you, the first thing that you will think about is “I cannot do this because I will lose positioning on Booking.com and sell less, something I cannot afford to do”. Until recently, Booking.com stated that this ranking depended on seven variables, known as the “Seven Cs”. If we remove AdWords of our name by Booking.com, on which of the seven Cs of the algorithm would it have a negative impact? On none. Nothing about the Booking.com algorithm says that it penalises for losing total sales.
|The 7 Cs of Booking.com
In fact, it makes complete sense. If your hotel is still working well in searches within Booking.com (by conversion, cancellation, price and the remaining Cs), why would Booking.com penalise it in results? It would be penalising itself since it would put a hotel (or many others) above yours that generate much less income per click, something they don’t want or are interested in.
Our experience with client hotels confirms it. When Booking.com stopped their ads, they weren’t penalised in the ranking.
Losing positioning in Booking.com is a risk that no hotel wants to take, but the respect (or fear) that we have for Booking.com must not make us lose focus and carry out the wrong decisions nor assume as normal those sales strategies (such as AdWords) that make no sense and that add no value to the hotel. Booking.com disagrees: They say that limiting options is not the way and the hotels shouldn’t be telling customers how to use the internet. A reasoning that is difficult to buy: I would like to see Booking.com’s reaction when a hotel bids for adwords using the brand “Booking.com”.