How GOOGLE can affect your distribution strategy

Over the past few months, Google has been adopting several improvements and changes in all of its products, especially with regard to search engine of hotels, with the goal of making faster the search users for information and allow hotels generate more qualified leads too. For all those who still don’t know, Google Hotel Finder was discontinued in the end of last year, directing the user, since then, directly to Google Maps or Google Search Page, which in my opinion it makes more sense, once these pages have greater popularity, is already being used frequently to search for accommodations and reinforce the idea that they are seeking to facilitate the booking process more and more.

Oliver Heckman, Google’s VP of Travel & Shopping, gave an interview during the ITB Berlin in the beggining of this year, reaffirming that Google definitily won’t become an OTA, neither now nor in the future, but the truth is the giant of the search seems to become one of the main distribution channels for hotels, this is because They included recently in their product called “Hotel Ads” a new program option available for hotels, in addition to the one that we already know as CPC (Cost Per Click), there is an option to join the commission program, where hotels pay comissions between 10% and 15% per effective bookings that comes through this channel, without needing to manage  budget for campaigns and giving CPC bids.

Okay. Hotels Ads is so effective as traditional search ads?

In fact, there are cases where hotels had bigger and better conversions through the Hotel Ads than their traditional search campaigns, which are the cases of Hilton Worldwide and Premier Inn in US reported by Google on its own website, increasing ROI in 12% and the number of bookings in 40% respectively. Surely, there are some particularities such as the user behavior, which can influence the performance of some hotels including the example of two luxury properties in S?o Paulo which takes part of the program and I had the chance to analyze, which in turn, didn’t achieve more satisfactory results compared to their traditional search campaigns.

Okay. It would be silly to consider my hotel into this program in this exactly moment?

Definitely not. Google is already offering connectivity with hotel technology companies such as RateTiger, SiteMinder and Mirai, integrating rates and room availability through Channel Manager. In addition to that, in the end of the last year Google launched its Instant Booking called “Book on Google” (for now available only in US Market), in other words, the user will make and complete the reservation process within the same web environment, without redirecting the user to another website, changing the way how is done today. And I am sure that you can take advantage of it using this channel and increasing your direct bookings in some way.

It’s worth considering and thinking about the following points:

1. Hotel Ads favors mainly to independent hotels, which in turn, do not generally have a large budget to invest in Google Adwords, not being necessary to compete with OTAs how it happens on a CPC model;
2. Companies that offer technological solutions that still don’t have connectivity need to evaluate how this can affect their business and if they consider offering this integration as an option to their customers, providing hotels that participate in the Hotel Ads program have an automated way to manage this channel;
3. Hotels that don’t have their websites optimized for the mobile version tend not to have so many users abandoning the website in the booking process, once both the Hotel Ads and the Book on Google are optimized for different types of devices offering clear and intuitive navigation improving the user experience;
4. In the same web environment the user will be able to see pictures, price, services offered by the hotel, such as, swimming pool, air conditioning, parking, location on Google Maps and others. Apparently will have features in the back office (administrative area of the channel), which will enable the hotel to highlight the percentage discount rate (how is done in OTAs), create criteria in order to provide offers to users according to the type of device used, number of night stays and others. Over time the reviews of Hotel Ads also will gain greater relevance as much as TripAdvisor.

Of course, despite being a great candidate to be one of the main channels for hotels, it also worth thinking in other points that certainly has great importance in your distribution strategy:

1. Google with its Instant Booking can assume intermediary role in your distribution, once effective bookings that comes through this channel will be commissioned and there is a player in the middle of the process. Related to Hotels Ads it depends on the commercial model. If there is a commission fee per booking, then it’s indirect.
2. Hotels can increase their dependence on intermediaries (mainly small hotels);
3. Hotels continue assuming the risk, once, how is done by OTAs, it is retransmited all the information related to the guests such as credit card, being the hotel responsible for payment process;
4. It is believed that hotels can reduce brand awareness with users doing their reservation directly via meta search/instant booking. Certainly, the user navigating on your website is much more interesting than to have him navigating in different web environments where your brand appears along with other brands, once that you have the possibility to explore more easily the benefits and characteristics of the product/destination through different content and media formats.

The truth is that hotels in Latin America need, especially now, evaluate and analyze the target behavior and understand why and what stimulate guests to book directly on their website, so that they can reposition strategies if necessary. I am used to say that to work with intermediaries is not something bad, they can be good partners, once they are so important for your business as you are essential for their business, and you as a manager, must become aware who dictate the rules of your business is you.

I believe that hotels should continue turning their attention to the strategy they are using, seeking to reduce commissions, diversifying distribution channels in order to increase profitability, continue prioritizing its direct channels and loyalty of customers. The search for short-term results in some situations may represent the commitment of results in the medium and long term, so stay tuned in order to evaluate constantly the relevance and profitability of your distribution channels because through these initiatives too you can identify growth opportunities and healthy revenues. As Alvin Toffler said: " If you don't have a strategy, you are part of someone else's strategy”.

 Also read:
The Use of CRM as a Business Strategy - https://goo.gl/eTQxTd

 ***Article (in portuguese) published on H?telier News website on June 22,2016. goo.gl/zdr8vF