Welcome to part 1 of the LIFE HAPPENS™ blog posts trilogy, The Metasearch Marketing Bible for Revenue Managers, that answers the biggest questions hotel revenue managers have about metasearch marketing: Why is it even called “direct” OR how is that different from online distribution? How do you set metasearch campaign goals? How do you build the bidding strategy and optimize a campaign’s performance? How do you achieve growth in bookings and revenue coming from metasearch traffic? Finally, how do you leverage metasearch marketing to improve your hotel’s global performance operating metrics such as RevPAR & Occupancy?
It’s a known fact that travel metasearch companies changed the rules of the online booking playground. While independent hotels know today that running campaigns on metasearch websites is the ultimate gateway drug for direct bookings growth, there’s still an ongoing debate over whether metasearch is a new form of distribution channel or if it is a marketing activity. The answer is that it’s both.
In this series of blog posts, we’re going to dive into the key aspects of metasearch activities for independent hotels and hotel chains. You will learn how to distinguish between the marketing side and the distribution side of a metasearch campaign, how to choose a bidding strategy and optimize it towards several business objectives, and how to achieve campaign growth that will both maximize RevPAR and minimize the cancellation rate.
The reason metasearch companies gained so much power in the online booking market is due to their successful takeover of the travel search market from the OTAs (online travel agencies). The OTAs had dominated that market for 15 years since the beginning of the World Wide Web. OTAs controlled the travel search market due to their unbeatable top search engine ranking for travel related keywords, both organic and paid. When every online travel transaction began with a Google search, whoever ranked higher got the business. But metasearch companies such as Kayak, Trivago and Tripadvisor were able to successfully execute local and global positioning strategies that changed internet users’ search behavior. Travel related searches conducted on metasearch websites presented them with more relevant results than Google (or other web search engines). This decisive travel market share gain is what allowed metasearch companies to become a main squad of the hospitality industry distribution chain and online travel marketing operations.
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OTAs will continue to play a major part in the online travel booking market, but we can expect that only the most powerful brands will survive the disruption created by the metasearch companies.
Cynics of the new situation may claim that, for hotels, there isn’t much difference in whether their distribution costs are paid to OTAs in the form of commission, or to metasearch companies in the form of customer acquisition cost. However, such an approach is rooted in a narrow perspective of the consumer behavior cycle and ignores online media trends as well as digital marketing strategies.
How Exactly is That “Direct”?
While an OTA/wholesaler reservation is never a direct booking, a booking made via metasearch is always direct. The guest actually lands on your hotel website and books through your booking engine software. What confuses many is the belief that users arriving from metasearch are loyal to the metasearch brand, and that they won’t recall the hotel’s website when planning their next trip to the destination. The only thing that is true in such an assumption is that users will in fact credit an essential part of their online booking experience to the metasearch website which enabled them to find a satisfying deal that matched the multiple parameters of their trip criteria. Obviously the metasearch website deserves this credit, and that is also what you’re paying for – you outsource the search experience that your hotel website will never be able to provide, because that isn’t your business (and that’s actually true for OTAs as well). But that is it, since the moment the user booked on your website, it is up to you to execute digital marketing retention and communication strategies to make that guest return to book direct.
In other words – Metasearch Marketing isn’t a branding channel, but a performance marketing channel. It is the single most effective channel in today’s online travel market for independent hotels and chains that want to achieve a rapid top line revenue growth. You pay for the initial customer acquisition (it is your CPA, or eCPA if you work on CPC basis), and then it’s up to you to make that guest come back to book direct. That mechanism is true for any other digital marketing channel you’d choose to utilize – Social media, SEO, PPC, or Affiliate marketing. You will always have the cost per acquisition that is your budget spent divided by the number of bookings driven from that channel, and after the booking is complete, a retention strategy should come into play to build up your direct returning customer base.
Distribution OR Marketing?
As mentioned in the intro, metasearch operations are driven by both distribution and marketing strategies. Therefore, trying to solely connect distribution KPIs or marketing KPIs to metasearch campaigns is fundamentally wrong and won’t let you properly measure the ROI of the budget invested in metasearch activities.
There are two answers to the question above. One is that metasearch is a distribution channel with marketing benefits; that’s a more distribution-dominated approach. The other one is more marketing-driven at its core, which we can call marketing with distribution strategic thinking. There is no question which one is better, because each hotel can adopt different approaches based on its brand equity or current state of direct booking share/growth. You can also have different approaches for different markets (global or domestic, for instance). In the end, if you want to achieve a dominant share of direct bookings and a growing number of returning direct guests, the way to get there is going to be more or less similar for both approaches.
The Distribution Part
Revenue management should be responsible for all the distribution strategy aspects of metasearch partnerships and campaigns. They would start with connectivity and technical integration, then decide on the inventory that will be available for metasearch engines, the room types and the pricing. It is up to the revenue manager to decide what inventory is allocated to metasearch, and that’s derived of business objectives.
The Marketing Part
The marketing process of a metasearch campaign has two main goals.
1) Increased conversion rate. Either with remarketing campaigns by retargeting the users that abandoned the website without completing a reservation with social networking (e.g. Facebook) or with banner ads (e.g. Google Display Network), or by improving the UI/UX experience of the booking flow itself (affected by the booking engine software). Improved conversion rate will reduce the cost per acquisition on CPC basis metasearch campaigns.
2) Retention. Digital marketing activities such as email automation, social media, and remarketing are aimed to increase hotel brand recognition and brand recall, grow loyalty programs, and promote special offers, all of which result in direct returning guests.
What About the Bidding?
Managing bidding on metasearch websites is quite an analytical task that requires suitable numeric skills. Not rocket science, but the person doing that should be able to feel comfortable around data, formulas, analytical dashboards, and Excel sheets. These skills become more essential for larger hotels, chains and also OTAs that promote inventory on metasearch websites. Ideally, the revenue manager would be a good fit for that kind of project.
Now I know there is a question over whether metasearch campaigns are attributed to marketing expense or to distribution cost. Unfortunately, there is really not enough room to elaborate on that here, so let’s assume we treat it as a marketing expense.
When you look at it as a marketing expense, it gets much easier to build a bidding strategy based on that.
I hope you will find this blog post valuable. Please leave any questions in the comments section below (I reply quickly).
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Read the next chapters of this series: