INTERNATIONAL REPORT—Travel search is evolving, and today’s travelers are beginning their trip research in different places—oftentimes on search engines. For this reason, many brands and third-party central reservations system providers have reported interest in delivering rate and availability numbers to Google but remain in a holding pattern due to the experimental nature of Google’s new products.
In a recent discussion with representatives from Google, a leading hotel CRS provider and a hotel ownership group, important questions arose about the details of Google’s pricing model for newly introduced products, specifically Hotel Price Ads and Hotel Finder.
Following that conversation, HotelNewsNow.com caught up with one of the only CRS providers providing rate and availability information to Google for inclusion in these beta features. Trust International, a global CRS provider with Taj Hotels and Leading Hotels of the World as its most high-profile clients, has been working with Google on an experimental basis since December of last year. Trust claims to be the first independent CRS to offer rates and availability to Google for the initial Hotel Price Ads product and, just earlier this month, for the introduction of Google Hotel Finder.
Trust’s VP of IT and Product Development Sandy Riach said Google’s original Hotel Price Ads feature—the drop-down window that appears throughout Google’s search results and most importantly on Google Places pages—isn’t as successful as both Google and Trust would have liked. To implement more of a “call to action,” Google introduced the Hotel Finder application earlier this month, and Riach said Trust and its hotel clients are excited about the new customer-friendly interface.
Riach also shed light on many concerns hoteliers have about working with Google …
… on conversion rates
On the initial Hotel Price Ads product, Riach said client hotels saw very high impression rates on the hotel’s landing page but lower click-through rates to Google’s drop-down menu and even lower on click-throughs to the supplier website.
However, once users clicked through to the supplier’s website, an average of 7% to 8% booked, which Riach considered “cost effective.”
“From talking to Google that’s not unusual,” he said. “Our clients’ (average daily rates) are fairly high, so we’re seeing 30 to 40 times (return-on-investment) on the cost of click versus actual revenue from the booking. Once the person clicks, it’s a well-qualified lead.”
With Hotel Finder, Riach said he is certain standard travelers will see a standalone product and understand it quicker, which will result in higher conversion rates. “It’s customer friendly,” he said. “We are excited about it, as are the hotels.”
… on list placement
Riach also discussed the process by which individual hotels get their link at the top of the drop-down list, above the third-party intermediaries. The lowest rate is displayed at the top, which Riach said counteracts rate parity practices.
“It’s apparent that rate parity isn’t always practiced as Expedia has undercut hotels by playing with things like taxes,” he said.
Representatives from Expedia declined to comment on their partnership with Google for this story.
Riach said there’s a “big push to see how quickly people can get to top of the list.” If two suppliers are offering the same rate, Google is introducing the ability to bid to get to that top position.
“They’re just literally talking about bringing that feature out now," he said. "If two people are at the same price, then you can bid to see who gets the top spot, which will be interesting.”
Although Google has not said so, Riach predicts the company will eventually allow providers to bid for the top spot in that list no matter what rate is provided. Google has declined to give futher details about plans for their hotel products.
… on pricing
Both Hotel Price Ads and Hotel Finder operate on a pay-per-click basis. The pricing structure is percentage-based, calculated by multiplying the room rate and the length of stay (i.e. the total value of the itinerary). For example, if a user enters into the Google widget that he or she wants to stay two nights at a hotel that costs US$100, the room supplier that receives the click-through is charged a percentage on US$200—regardless of whether that user ultimately books a hotel room.
Riach said the maximum length of stay a user can enter is 10 days, which alleviates some concern that hoteliers could be stuck with an outrageously high PPC cost even if they never receive a booking.
“No one is saying they’re paying more than they’re receiving,” he said of his clients.
There is no way to cap the monthly amount spent on the Google Hotel products like there is with Google AdWords. Riach said providers must monitor daily reports and control spending by turning availability on and off.
“Google hasn’t yet got as good as they will get with monitoring the costs,” he said. “We get daily reports, and we feed that into a system that we provide to our customers. Our customers see that, and they can manage the cost to them. Being Google, I wouldn’t be surprised if up pops a real nice, user-friendly tool, but you don’t always find out what they’re going to do until they’ve done it.”
… on Google’s future
“The whole thing is still in its infancy … or at least it’s certainly not out of childhood yet,” Riach said of Google’s hotel products. He said he thinks Hotel Finder will be a game-changer as hotels will consider it an alternative to giving rate and availability to the OTAs.
“Our hotels that are digitally clever are already very much in a process of shifting traffic from the OTAs to their own websites,” Riach said. “This has the potential to really help them compete against the big boys. The hotels will be right there.”
Riach said he wouldn’t be surprised to see Google combine its current hotel tools with the highly anticipated flight tool expected to emerge after the acquisition of ITA Software earlier this year.
“I think the clever hotels see this as strategic and will see how well it does,” he said. “Once the processes and systems are up, they’ll be ready to jump in.
“When Google flight comes out and they’ve already got Google Hotels, where else are you going to go?”