Why Hotels Can No Longer Ignore Google
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There was a time when hoteliers primarily worried about the impact of online travel agencies (OTAs) to direct business.
Now, a new player is changing the hospitality industry: the metamediary.
A metamediary is a company that specializes in metasearch; that is, it acts as a third party, linking consumers to a booking site through a simple web search.
One metamediary that is making a lot of noise lately is Google. An update to flight booking engine Google Flights in February caused a lot of commotion, with Google Flights being praised as even more efficient and helpful than major OTAs such as Expedia and Priceline. Google Hotel Finder acts in a similar manner.
But while Google Flights includes a lot of direct links to airlines’ official booking sites, Google Hotel Finder—at least for now—appears to be different in that it features many more accommodation booking links to OTAs than direct links. This has less to do with Google favoring OTAs and more to do with OTAs paying to be featured among the top links. Naturally, this could hurt hoteliers in a number of ways. Not only are they losing direct business to OTAs, but—given Google Hotel Finder’s prominence in hotel searches—they may have to pay for ad space on the metamediary just to stay competitive.
The article “Running Shoes, Bears, and Revenue Strategy” by Cindy Estis Green notes that are three potential problems the metamediary age can have on hotels. One, if rooms are simply being sold quickly by price through web searches, it can undermine the brand name. Two, the relationships between hoteliers and guests can become watered down and diminished. And third, hoteliers won’t have much leverage when negotiating for ad placement via metamediaries and metasearch engines (with like, say, Google).
Chris Nieberding, an associate with consulting and services organization HVS, recently took a look at the issue in his article, Metamediaries Forcing Hotels to Adapt.
Nieberding writes, “Although the new metamediaries will most likely reduce costs from OTAs due to the increased competition, distribution costs for hotels are expected to increase overall moving forward.”
Hotel profitability, in effect, is indeed declining, according to Nieberding.
“The industry is recovering, but the cost to maintain a presence in a dynamic digital marketplace against new market entrants that hold a strategic position relative to technology and marketing resources is a major struggle,” he writes.
So, what to do?
Well, Sloan Dean, CRME, vice president of revenue optimization for Ashford Hospitality Trust, believes hoteliers need to be more forward-thinking to keep up, for one. “Forward-thinking” in today’s marketplace means being at the forefront of the analytics movement. Currently, OTAs and metasearch engines are far ahead of the hospitality industry in general when it comes to adopting and investing in the technology needed to track and target potential customers.
Simply put, metamediaries have been quicker to identify the importance of technology, data and analytics than hotels, and they have jumped on a lucrative opportunity.
If hoteliers want to avoid getting pushed into the dark ages when it comes to the booking process, they need to get out of the Stone Age and reinvent more than the wheel.
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