New “Direct” booking via Google and Tripadvisor - threat or opportunity for hotels?
Tripadvisor has effectively positioned itself as a new breed of online travel agent by launching its Instant Booking service recently. The service allows hotels to directly display rates and availability on Tripadvisor via a feed from their booking engine system, such as Bookassist’s. Customers on Tripadvisor can then see both OTA rates and those direct-from-hotel rates to make their booking choice. The customer never leaves the Tripadvisor site when booking “direct” with the hotel. (That “captive” approach of trying to keep the customer on one site for all was originally driven by Tripadvisor’s mobile business, where jumping between sites on mobile was a far bigger barrier to conversion than it would be on desktop.)
Not to be outdone, Google has now also expanded its Book on Google feature (now in the USA) in a change of strategy from their previous Google Hotel Finder and Hotel Price Ads approach. Again, the service allows hotels to directly display rates and availability via a feed from their booking engine system. The customer can now book directly from search results without ever leaving the Google site.
Both services claim to be “direct” friendly, helping the hotel to reach their customer directly, and positioning themselves apart from the big-brand OTA players such as Expedia and Priceline. But their “hybrid” services nonetheless come with hefty commissions from 12% to 15% for delivering acquisitions via this route (cost per acquisition or CPA model). In parallel, both continue to offer cost per click (CPC) alternatives also.
With these two giants of the travel search and research arena offering hybrid booking services, what does this mean for the hospitality industry? As usual with disruptive play, there are both threats and opportunities for the independent hotelier.
The moves from Tripadvisor and Google are, in our view, a positive for hotels if they know how to leverage the potential advantage. It does take specific action on the part of hotels to engage with the new services appropriately however, and, with inaction, therein lies the threat.
Giving Hotels Leverage
In terms of hotel online business, we are in the midst of a monopoly or duopoly stranglehold in most parts of the world with Priceline/Booking.com and Expedia dominating OTA sales. Often, this has meant that hotels are reluctant to challenge that status quo and have no option but to go along with often onerous contract terms.
The introduction of new viable routes to capture online business, backed by serious players in the travel space who can potentially deliver volume, breaks that monopoly/duopoly and introduces real competition for the main OTAs. If managed correctly, hotels should no longer fear reducing their exposure on specific OTAs since there is real opportunity to leverage the broader metasearch space encompassing Trivago, Kayak and others, as well as Google’s and Tripadvisor’s hybrid booking options.
Of course, managing carefully means managing availability and rates distribution at channel level, and not making total inventory available everywhere. The management of these hybrid metas is no different to the careful management required of OTAs.
Remember that if hotels refuse to “play” with these hybrid channels, their inventory and rates will appear anyway via OTAs, and at higher acquisition cost. It’s far better to be there directly and be in control of your offering. Therefore, it’s a question of effective management of such opportunities by the hotel.
Overall, adding new strong players to distribution is a good thing for hotels. Choice breeds competition that may ultimately favour not just the consumer but the supplier. (We will see.)
The Data Play
In the case of both TripAdvisor and Google, the hotel’s booking engine is the technology feeding the rates and availability to the site, there is no new “extranet” for the hotel to manage. Also, completion of the booking takes place behind the scenes on the hotel’s booking engine platform. Unlike the OTAs who have rowed back even further on the information they supply to hotels regarding the inbound customer, TripAdvisor and Google are providing the customer’s real email, and the hotel sends the actual booking confirmation email. This allows hotels to manage, own and monetise pre-stay communication, as well as maintain ownership of the customer interaction post-stay.
This is particularly important when you consider that the large OTAs are increasingly generating their revenue from “private” club sales to their customer base via email offers or private log-in, offering deals that never appear on the public sites. Clearly, customer data is extremely valuable. (Whether hotels are equipped to capitalise on that effectively is another question however.)
The cost of acquisition for that first hybrid booking via Tripadvisor or Google may therefore appear high (though not as high as OTAs), but it is critical the hotel has a data-use strategy to ensure that opportunities are created for the customer to book direct next time.
Browsing and Research Phase
A fundamental difference also between Google and Tripadvisor on the one hand, and the OTAs on the other, is that the browsing and research phase of travel planning overwhelming takes place on the former. By building in booking opportunities to the research phase of travel planning, it may well short-circuit the decision and lead to booking acquisitions that would otherwise have ended up on an OTA at a later stage in the decision process.
Also, with Tripadvisor the hotel has much more control of the content describing its services via the comprehensive multi-lingual content it can manage as part of its Tripadvisor listing. Google likewise is championing the clear display of hotel amenities as a way for hotels to stand out. Both these areas help hotels to be less commoditised compared to the OTAs’ approach, and to shout a little more about what makes them unique. Such rich information often drives additional confirmatory traffic to hotel websites, where direct booking potential can also be capitalised upon.
It remains to be seen how this play from Tripadvisor and Google will work out. The primary disruption is to the OTA model, but for the reasons above we do not believe that it diminishes the hotels’ opportunity to increasingly drive direct business on hotel websites. Both OTAs and direct-to-hotel booking rates continue to grow, mostly at the expense of offline and traditional travel modes, even if OTA business has the stronger growth rate.
Indeed OTAs are increasingly interested in direct business, and have been signalling their concern about how direct may evolve to reduce their business growth - witness booking.com’s move into providing the booking suite for hotels, and their associated acquisitions in the hotel direct business space.
With book-direct models, Tripadvisor may well have the edge over Google here, as a dominant travel-focused brand with a “good” reputation among online customers who trust its reviews and among hotels who value the custom and exposure it brings. Google on the other hand has massive volume but still did not manage to deliver effectively with its Hotel Finder or Hotels Ads approach previously.
With Tripadvisor, bringing in a money element may well introduce a risk to its standing as an independent review provider. Can it truly be independent in how it ranks hotels if it has more to earn from some hotels than others? They have to manage that issue carefully. Likewise, Google has to thread carefully with its push towards booking since its primary bread and butter in travel is pay-per-click advertising fees from the OTAs as well as from hotels. Google also has continual issues with anti-trust investigations into how its monetisation of search may lead it to skewing the validity of search results.
For the independent hotel, the moves are broadening the landscape yet again and this means that more careful management is key. Hotels need to have a full digital marketing strategy across all potential customer touch points, and need to work more strategically with their customer data if they are to properly leverage these new avenues for business. The key, as always, is for hotels to be able to actively manage the opportunity, rather than allow themselves to be managed by it.
For that, they need the appropriate technology and the expertise.
Dr Des O’Mahony is CEO and Founder at Bookassist (http://www.bookassist.com), the multi-award-winning technology and digital strategy partner for hotels worldwide, and is a HSMAI “Top 20 Extraordinary Minds” recipient.